A foreclosed property sells for less than the unpaid debt and allowable foreclosure expenses. In a jurisdiction that permits personal recovery after the sale, what is the lender seeking when it sues the borrower for the remaining balance?
Correct Answer
C) A deficiency judgment for the unpaid balance
A deficiency judgment is a personal money judgment for the amount still owed after the collateral has been sold and the sale proceeds have been applied. It is the lender's attempt to recover the shortfall that remains after foreclosure.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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.
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