A Maryland borrower defaults on a deed of trust loan. The trustee conducts a non-judicial foreclosure sale and the property sells for less than the outstanding loan balance. Which term describes the remaining unpaid debt after the foreclosure sale proceeds are applied?

Correct Answer

D) Deficiency, which the lender may seek to recover through a separate deficiency judgment

When a foreclosure sale produces proceeds that are less than the outstanding loan balance, the difference is called a deficiency. In Maryland, after a foreclosure sale (whether judicial or non-judicial trustee's sale), the lender may pursue a deficiency judgment against the borrower through a separate court action to recover this remaining unpaid amount. The lender is not automatically entitled to collect the deficiency — a separate legal proceeding is required.