A South Carolina lender forecloses on a property through the circuit court. The court-supervised auction results in a sale price of $195,000. The outstanding first mortgage balance is $220,000, and the lender incurred $5,000 in court costs and attorney's fees related to the foreclosure. After satisfying the mortgage balance and foreclosure costs, what is the deficiency amount the lender may seek to recover from the borrower through a deficiency judgment?
Correct Answer
B) $30,000
Step 1 — Total amounts owed to lender: Mortgage balance $220,000 + Foreclosure costs $5,000 = $225,000. Step 2 — Sale proceeds applied to debt: $195,000. Step 3 — Deficiency amount: $225,000 − $195,000 = $30,000. The lender may seek a deficiency judgment for $30,000 in South Carolina circuit court.
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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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