A deficiency judgment is a court order to pay the balance owed by attaching a personal claim against the borrower if the proceeds from the sale of the security/ foreclosed property does not yield sufficient proceeds to pay off the mortgages, accrued interest, legal fees, back taxes, homeowner association dues, etc.

This option may or may not be available to the lender, depending on whether they have made a recourse or nonrecourse loan, which is a secured loan that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable.

A debtor who has a deficiency judgment should see an attorney for possible remedies, including bankruptcy.

In Real Estate, Deficiency Judgment is generally associated with Foreclosure. Lenders may obtain a deficiency judgment when they foreclosed on a property and either, the property has been damaged or decreased in value.

Also see: Being Sued for a Deficiency Judgment After Foreclosure