Consumer encyclopedia: What is a deficiency judgment?

A deficiency judgment is a legal judgment that can result after a foreclosure. A deficiency is the amount of the mortgage that isn’t satisfied by the sale price of the home in foreclosure. Here’s an example:

First Mortgage = $100,000

Second Mortgage = $50,000

Property sells at Sheriff’s Sale for $90,000.

In a typical foreclosure by advertisement, even though the holder of the First Mortgage lost $10,000, it can’t go after the homeowner any of the money it lost.

The holder of the Second Mortgage can go after the homeowner for the full $50,000 as a deficiency judgment.

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