After a foreclosure is complete and the home is sold, a borrower may still owe money if the sale price of the house was not large enough to cover the amount owed on the loan, this is called a deficiency. In many cases borrowers are protected from a deficiency by Arizona’s anti-deficiency statutes, which prevent lenders from pursuing the borrower if the home is sold for less than the total owed on the home loan. 

For borrowers facing foreclosure with a VA home loan, it may be best to consult with an attorney regarding the possibility of having a deficiency because case law suggests that state anti-deficiency statutes are pre-empted by federal law.  This means that a borrower in foreclosure may not be protected by Arizona’s anti-deficiency statutes if the loan is a VA home loan, or a government issued home loan. For more information regarding Arizona’s anti-deficiency statutes, see AZLawHelp.org’s article titled “Foreclosure Deficiencies in Arizona.”

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