Helvetica Servicing, Inc. v. Pasquan

Helvetica Servicing, Inc. v. Pasquan, 229 Ariz. 493, 277 P.3d 198 (App. 2012) was a judicial foreclosure involving the refinancing of a loan for the tear-down and construction of a new luxury residence. Id. at 495,3-5, 277 P.3d at 200. Following the new construction, some loan proceeds remained which the homeowners used to pay interest on the loan as well as "landscaping, maintenance, taxes, utilities and marketing fees." Id. The Court held that refinancing a purchase money loan did not change its character and the anti-deficiency protections still applied. Id. at 499,23, 277 P.3d at 204. The Court further found that construction loans for construction of a qualifying residence merited anti-deficiency protection. Id. at 501,32, 277 P.3d at 206. Most pertinent to this matter, however, we also found "to the extent a judicially foreclosed mortgage includes both purchase money and non-purchase money sums, a lender may pursue a deficiency judgment for the latter amounts" where the non-purchase money sums could be traced and segregated. Id. at 501-02,34, 37, 277 P.3d at 206-07. In Helvetica, the Court outlined the policy arguments and the three possible outcomes when a mortgage secures both purchase money and non-purchase money sums. In Helvetica, however, the Court noted there were "payments that clearly were not purchase money in nature, including sums for maintenance, utilities, marketing fees, and penalties." 229 Ariz. at 501,34, 277 P.3d at 206.