When a home is sold at foreclosure, it often brings less than the amount owed on the mortgage. This is referred to as a “deficiency.” If the loan is a home equity loan, then the lender may not recover the deficiency from the homeowner as there is no personal recourse or liability on a home equity loan. However, in other types of loans, the homeowner may be sued for the deficiency provided suit is timely brought (2 years from the date of the foreclosure sale). If sued on a deficiency action, the borrower may request that the court determine the property’s value on the date of the foreclosure sale. If the court’s value is greater than what the property was purchased for at the foreclosure sale, the court’s value is used in determining the amount of the deficiency judgment.
