Under what condition can a lender obtain a deficiency judgment against a borrower?

A lender can obtain a deficiency judgment against a borrower when the sale of the property produces insufficient funds to satisfy the loan. This situation arises when the amount received from the foreclosure sale is less than what the borrower owed on the mortgage.

In such cases, the lender has the right to pursue the borrower for the remaining balance to recover the full amount of the debt. A deficiency judgment serves as a legal means for the lender to collect the shortfall, allowing them to potentially garnish wages or levy bank accounts to satisfy the debt.

Other scenarios, such as when the mortgage is fully paid, do not present a basis for a deficiency judgment, since there would be no remaining debt. Similarly, if the borrower files for bankruptcy, the lender’s ability to pursue a deficiency judgment may be impacted by the bankruptcy proceedings and protections that arise from it. Lastly, if the property value increases after foreclosure, it does not affect the lender's ability to claim the deficiency judgment, as the judgment is based on the difference between the loan amount and the sale proceeds, regardless of subsequent changes in property value.