In Arizona foreclosure deficiency judgment, the lending institute can sue the borrower for any deficiency in the actual payment received after selling the foreclosed home and the total borrowed money. The total amount also include administrative cost, fees, charges and cost during foreclosure process. For every state in US there are different laws for deficiency judgment. In Arizona foreclosure deficiency judgment is allowed but there are certain limitations that makes it more favorable for the homeowners than lenders.
According to Arizona anti-deficiency statutes the lender in certain cases cannot sue the homeowners for deficiency. According to the Title 33, Chapter 6.1 of Arizona Revised Statutes, the lender cannot sue the borrower:
- If the size of the property is 2.5 acres or less than that
- Further anti deficiency statutes is applied if the foreclosed home is a single family home or duplex.
- Moreover homeowners having second mortgage, refinanced loans and home equity line of credit are also exempted by the statute.
Deficiency Judgement in Arizona
Deficiency judgment in Arizona is allowed only for judicial foreclosure process and that too within the period of 90 days after foreclosure auction. The Veteran Affairs or VA home loans are the exception to anti-deficiency law. In case of VA loan deficiency judgment can be obtained even if the state prohibits the same in certain cases. In case the deed-in-lieu has happened, which means the homeowner willing gives the title of the home to lender, then the right of Arizona foreclosure deficiency judgment does not remain with the lender. But in this case the remaining balance, if any, becomes taxable income which will have to be paid in the next tax return.
There are two anti-deficiency laws that are available for the protection of borrowers. These are:
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