Arizona’s Broad Anti-Deficiency Protection Confirmed

The non-judicial foreclosure process affords banks and lenders a relatively "cheap" means of executing on their collateral in the event of a borrower's defaults. That cheaper process comes at a price, however. Arizona has a number of statutory protections for borrowers that either outright limit the amount lenders may recover from them or create procedures that may have a similar effect. A.R.S. Section 33- 814(G), for example, precludes lenders from recovering any deficiency between the amount of a loan and the amount realized from the nonjudicial foreclosure and sale of property that is two and one-half acres or less and is utilized for either a single one-family or a single twofamily dwelling. Likewise, in circumstances where a lender may seek a deficiency after a non-judicial foreclosure, A.R.S. Section 33-814(A) entitles a borrower, upon request, to a hearing on the fair market value of the trust property at the date of the trustee's sale, and to have that value