5 years ago I refinanced the original loan on my home in Arizona, but only to lower my payments. I did not take out any equity money. Does my loan still qualify for protection under the anti-deficiency statue? Thank you
When a lender lends someone money to purchase a particular thing, and the loan is secured by the value of the thing, the lender has a "purchase money security interest" ("PMSI"). In the world of battling security interests--a world which is relevant when borrower defaults--usually the holder of a PMSI has priority over other lienholders. The idea is that a lender who lends a borrower money to purchase something has the right to have the main security interest in the thing which he lent the borrower the money to purchase. So "purchase money" just means money lent by a lender in order to purchase a particular thing.
Not legal advice as I don't hold Arizona licensure. It's just my explanation of what a "purchase money security interest" is. If you need legal advice, please consult a lawyer who holds Arizona licensure and can advice you in detail based on all the facts and circumstances.
The loan you describe would retain the characteristic of being a purchase money loan. The following is from the Arizona case Bank One, Arizona, N.A. v. Beauvais:
"Given these strong statements concerning the legislature's consumer protection objective, we believe the legislature did not intend that a loan would lose its character as a purchase-money obligation when, as here, it is extended, renewed, or the remaining portion of the original loan is refinanced and the deed of trust on the property that was bought with the original loan continues or is renewed. Given the realities of the marketplace, to believe otherwise would put many homeowners, unable to make mortgage payments, at the peril of facing personal liability as well as the loss of their homes-a result the legislature intended to avoid through the Anti-Deficiency Statutes.
"Here, the majority of the original loan was used as part of the purchase price for residential property of less than two and one-half acres used for a single-family dwelling. A deed of trust on the property secured the loan. Although a portion of the 1989 consolidated loan was non-purchase-money, the Bank no longer argues that the loan can be bifurcated; thus, we consider the entire loan to be a purchase-money obligation."
So, even if you had taken out some money, you would be protected as long as you otherwise qualify for such protection.
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