You have to wonder if this will have a chilling effect on second mortgages in Arizona.  Who in their right mind would want to assume a second lien position knowing that it can be wiped out so easily. 

The Restatement of Law, which the Arizona court adopted, is not law until a court makes it so.  They really should be careful in doing so, particularly where it is such a drastic departure from well established law.

If I were in Arizona, I'd be lobbying the legislature to pass a new law overturning these bad cases.