A property in Camden County, New Jersey was sold at a sheriff's sale for $375,000. The outstanding first mortgage balance at the time of sale was $420,000. Court costs and sheriff's fees totaled $5,000. Assuming the lender pursues a deficiency judgment, what is the maximum deficiency amount the lender can claim against the borrower?
Correct Answer
C) $50,000
The deficiency is calculated as the total amount owed minus the sheriff's sale proceeds. Total amount owed = mortgage balance + court costs and fees = $420,000 + $5,000 = $425,000. Sheriff's sale proceeds = $375,000. Deficiency = $425,000 − $375,000 = $50,000. In New Jersey, the lender may seek a deficiency judgment for this amount, though the court will determine whether the fair market value of the property exceeds the sale price, which could reduce the deficiency.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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