If a foreclosure sale occurs and the borrower is still liable for the remaining debt, this is called a ...

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Multiple Choice

If a foreclosure sale occurs and the borrower is still liable for the remaining debt, this is called a ...

This is about the shortfall that can remain after a foreclosure sale. If the sale doesn’t bring in enough to cover the remaining loan balance, the unpaid amount is called the deficiency. The lender can seek a deficiency judgment—a court order requiring the borrower to pay that shortfall—subject to state laws and the type of foreclosure. If the sale brings in more than the debt, the extra goes to the borrower as a surplus, not a deficiency. The terms “recovery” or “deficit balance” aren’t used to describe this situation.

This is about the shortfall that can remain after a foreclosure sale. If the sale doesn’t bring in enough to cover the remaining loan balance, the unpaid amount is called the deficiency. The lender can seek a deficiency judgment—a court order requiring the borrower to pay that shortfall—subject to state laws and the type of foreclosure. If the sale brings in more than the debt, the extra goes to the borrower as a surplus, not a deficiency. The terms “recovery” or “deficit balance” aren’t used to describe this situation.

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