finance
deficiency judgment
A deficiency judgment is a court judgment against a borrower for the amount still owed when a foreclosure sale does not bring enough to pay off the loan and costs. It lets the lender pursue the borrower's other assets. Many states limit or prohibit deficiency judgments, especially for nonjudicial foreclosures or owner-occupied homes, so availability varies by state.
- Exam tip
- Deficiency equals debt minus foreclosure sale proceeds. It typically requires a court process and becomes a general lien on the borrower's other property.
- Example
- A borrower owes $220,000 and the foreclosure sale nets $190,000; the lender may seek a $30,000 deficiency judgment.
Related terms & state variants
Sources
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Last verified: 2026-10-23