A Kentucky property was sold at a sheriff's sale for $245,000 following a judicial foreclosure. The outstanding mortgage balance was $260,000, accrued interest totaled $6,500, and the lender's court costs and attorney's fees were $8,500. The lender files for a deficiency judgment. What is the amount of the deficiency judgment the lender may seek?
Correct Answer
D) $30,000
Step 1 — Calculate total amount owed: Outstanding mortgage balance $260,000 + accrued interest $6,500 + court costs and attorney's fees $8,500 = $275,000 total debt. Step 2 — Calculate deficiency: Total debt $275,000 - Sheriff's sale proceeds $245,000 = $30,000 deficiency. The lender may seek a deficiency judgment of $30,000 against the borrower under KRS Chapter 426.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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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