Deficiency Judgment

A deficiency judgment occurs when a borrower fails to pay off a mortgage and the property is sold at foreclosure for less than the amount owed on the loan. If the sale doesn't cover the full debt, the lender can seek a deficiency judgment against the borrower to recover the remaining balance. This judgment is a court ruling stating that the borrower owes the difference and may result in the lender garnishing wages or placing liens on other assets. Essentially, it allows lenders to pursue further payment beyond the property itself.