A lender in Delaware has obtained a foreclosure judgment from the Court of Chancery against a borrower who owes $195,000 on a mortgage. The property sells at the sheriff's sale for only $160,000. The lender wants to recover the remaining $35,000 from the borrower personally. Which term describes the legal action the lender may pursue to recover this shortfall under Delaware law?
Correct Answer
A) Deficiency judgment
A deficiency judgment is the legal remedy available to a lender when the foreclosure sale proceeds are insufficient to satisfy the full outstanding mortgage debt. In Delaware, after the Court of Chancery has adjudicated the foreclosure and the property has been sold at a sheriff's sale, the lender may seek a deficiency judgment against the borrower for the remaining balance owed ($195,000 - $160,000 = $35,000). This is consistent with Delaware's judicial foreclosure framework.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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