Where the sale proceeds are less than the debt, the lender may seek a deficiency judgment for the shortfall. Many states restrict or prohibit deficiencies, particularly after non-judicial foreclosure or on residential purchase-money loans.
Fair value limitations may reduce the deficiency.
Alternative Names:
Deficiency, Post-Foreclosure Deficiency
Why it Matters?
Anti-deficiency statutes are the threshold and vary dramatically, with some states barring deficiencies entirely after non-judicial sale and others limiting them to the difference between the debt and the property's fair value rather than the sale price. That distinction matters because foreclosure sales frequently produce prices below market. Electing judicial foreclosure to preserve deficiency rights is a strategic decision made before the process begins.
Frequently Confused with
Related terms
Frequently asked questions
What is fair value limitation?
Why elect judicial foreclosure?
