A Kentucky homeowner defaults on a mortgage with an outstanding principal balance of $180,000. After the court-ordered sheriff's sale, the property sells for $162,000. The lender's allowable court costs and attorney fees total $6,000. What is the amount of the deficiency judgment the lender may seek against the borrower under Kentucky's judicial foreclosure process?
Correct Answer
A) $24,000
Under Kentucky's judicial foreclosure process (KRS Chapter 426), after a sheriff's sale the lender may seek a deficiency judgment for the full unpaid debt minus the sale proceeds. The total amount owed is $180,000 (principal) + $6,000 (court costs and attorney fees) = $186,000. The sheriff's sale generated $162,000. Deficiency = $186,000 − $162,000 = $24,000. Because Kentucky is a strict judicial foreclosure state, the court oversees this entire process and may enter a deficiency judgment for the remaining balance.
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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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