What can a lender obtain if a foreclosure sale does not cover the owed amount on a loan?

A deficiency judgment is a legal action that allows a lender to recover the amount of money still owed after a foreclosure sale. When a property is sold in foreclosure, it's often possible that the sale price does not cover the total amount owed on the mortgage loan, including any outstanding interest or fees. In such cases, the lender may pursue a deficiency judgment against the borrower. This judgment allows the lender to seek repayment for the remaining balance, typically through wage garnishment or placing liens on other properties owned by the borrower.

This is a key concept in real estate and lending, reflecting the responsibilities of borrowers and the rights of lenders. The process and enforceability of deficiency judgments can vary by state, but they serve as a safeguard for lenders to recover losses incurred from loans that are not fully repaid through asset liquidation in foreclosure situations.