Deficiency on VA Home Loans

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’s article titled “Foreclosure Deficiencies in Arizona.”

To apply for free and reduced fee legal assistance in Arizona, follow this link to the Access To Justice Online Intake System.