What legal action can a lender file if they receive less than the total loan amount at a foreclosure sale?

If a lender receives less than the total loan amount at a foreclosure sale, they can seek a deficiency judgment. This legal action allows the lender to recover the remaining balance owed on the loan after the sale of the property, which was sold for less than the outstanding loan amount.

In a foreclosure scenario, when the property is auctioned off, the proceeds may not cover the full amount that the borrower owes. If there is a deficit between what is owed and what the property sells for, the lender may file for a deficiency judgment against the borrower to obtain a court order requiring the borrower to pay the remaining debt. This process underscores the lender's rights to seek compensation for financial losses incurred due to the foreclosure.

Other options do not accurately represent the lender's recourse in this situation. A counterclaim is typically a response by a defendant in a lawsuit, related to claims against the original claimant, which does not apply here. A title action refers to disputes regarding property ownership, not to recovering loan amounts. Loan forgiveness would imply that the lender absolves the borrower of their remaining debt, which is not applicable in the case of seeking recovery post-foreclosure. Thus, the deficiency judgment is the appropriate legal action that allows lenders to pursue the remaining balance owed