How does the bank make up for short sale deficiency?

When a borrower defaults on a short sale, the bank may face a deficiency if the sale price is lower than the mortgage balance. To recover this loss, the bank can pursue a deficiency judgment against the borrower, allowing them to claim the remaining balance. Additionally, banks may adjust their lending practices or increase fees to mitigate future risks, and they often sell the property at auction to recoup some of their losses. Furthermore, some banks may offer loan modifications or other solutions to help borrowers avoid default altogether.