my home is in foreclosure in the state of Arizona. Can the junior (2nd) lien holder pursue me for a deficiency balnce?
State/Country relating to question: Arizona
Thank you for using Just Answer. In order to respond to your inquiry, I need some additional information. First, is the property 2.5 acres or less and a single family or duplex? Second, was the second mortgage taken out to purchase the property?
Yes, it is less than 2.5 acres and a single family and no the mortgage was not taken out to purchase it. I have heard several differnt answers from different attornies. The last one said, if the 1st lien holder go Judicial foreclsoure, then yes, if they go non-judicial, then no they can not touch me.
In Arizona, protection for residential borrowers is set forth in two anti-deficiency statues: A.R.S. §§ 33-729(A) and 33-814(G). The two statutes provide different protection.
33-729(A) bars a lender from obtaining a deficiency judgment when a purchase money (i.e. mortgage taken to originally buy property) is foreclosed by judicial sale, but the courts have interpreted this statute to also apply to deeds of trust that are foreclosed judicially. If a mortgage or deed of trust was not a purchase money credit facility, then this statute does not apply.
33-814(G) on the other hand applies to all deeds of trust, whether or not they are purchase money credit facilities that are foreclosed by trustee's sale.
So, if it were a purchase money mortgage or deed of trust AND it was foreclosed judicially, the first statute would bar a deficiency.
If it is a deed of trust AND it is foreclosed by trustee's sale, the second statute would bar a deficiency.
If it is a non purchase money mortgage, the lender could obtain a deficiency.
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Attorney and landlord with ten years experience advising landlords and tenants
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