What does deficiency judgment mean?

A deficiency judgment is a court order that holds a borrower personally liable for the remaining balance on a loan after a foreclosure sale. If the sale of the property does not cover the full amount owed on the mortgage, the lender can pursue this judgment to recover the difference. This legal action allows the lender to seek repayment through various means, such as garnishing wages or placing liens on other assets. Deficiency judgments vary by state, with some states having laws that limit or prohibit them.