A Connecticut lender initiates a strict foreclosure action against a homeowner who owes $280,000 on a property appraised at $310,000. After the court grants the strict foreclosure judgment and sets a law day, the homeowner fails to redeem the property. The lender takes title. Later, the lender sells the property for $310,000. Under Connecticut law, can the lender seek a deficiency judgment against the original homeowner?
Correct Answer
C) No, because the property sold for more than the debt owed, so there is no deficiency.
A deficiency judgment is only available when the proceeds from the foreclosure are insufficient to cover the outstanding debt. In this scenario, the lender owed $280,000 and ultimately sold the property for $310,000 — which exceeds the debt. Therefore, there is no deficiency, and no deficiency judgment is warranted. The lender was made whole (and more) by the eventual sale proceeds, so seeking a deficiency judgment against the homeowner is not applicable here.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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