A Connecticut homeowner defaults on a mortgage. The outstanding loan balance is $360,000. The court conducts a strict foreclosure and the lender takes title to the property. An appraisal values the property at $315,000 at the time of the foreclosure judgment. What is the maximum deficiency amount the lender could seek in a deficiency judgment action against the borrower?
Correct Answer
A) $45,000
The deficiency is calculated as the outstanding loan balance minus the fair market value of the property at the time of the foreclosure judgment. $360,000 (outstanding balance) − $315,000 (appraised value) = $45,000. In Connecticut strict foreclosure, the deficiency judgment is based on the difference between the debt owed and the fair market value of the property, not a sale price (since no sale occurs).
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