Definition - What does Deficiency Judgment mean?
A deficiency judgment is a judgment made by a court that lets a debtor know that the sale of their foreclosed property did not generate enough funds to completely reimburse a lender for a mortgage.
A deficiency judgment effectively puts a lien on the debtor; they will then be legally obligated to repay the remaining funds left in the mortgage.
Justipedia explains Deficiency Judgment
A person who has to deal with a deficiency judgment can face serious financial problems. This is because for many people, their house is the most valuable asset that they have, and their mortgage is their biggest bill. So, if the sale of the house does not fully pay the mortgage, then a person can struggle to find money to pay the remaining balance. For this reason, it is wise for people to try to avoid deficiency judgments.