The Rumored Arizona Anti-Deficiency Law Expiration

Over the past several months we have received many inquiries from concerned homeowners regarding the expiration of Arizona's anti-deficiency law. Just as Mark Twain once commented about rumors of his own death, the rumors of the death of Arizona's anti-deficiency law are greatly exaggerated. In fact, such rumors are completely false.

Arizona's anti-deficiency laws are primarily addressed in two separate statutes, A.R.S. § 33-729(A) and A.R.S. § 33-814(G). These statutes operate to prevent lenders from pursuing borrowers for the difference between what is owed on a mortgage loan and what is recovered by the lender in a foreclosure sale in many, but not all, cases. These statutes have been the law in Arizona for decades and there is no indication that these laws will be changed any time soon.

As far as I can tell the idea that Arizona's anti-deficiency laws are expiring or changing is the result of misinformation from various sources about the expiration of the Mortgage Foregiveness Debt Relief Act of 2007. This law offers relief to homeowners who would owe taxes on forgiven mortgage debt after foreclosure, but unlike Arizona's anti-deficiency statutes it has nothing to do with the actual liability to the lender. The Mortgage Foregiveness Debt Relief Act was originally set to expire at the end of 2009, but it has subsequently been extended on two occasions, and is now set to expire at the end of 2013.