A deficiency balance on foreclosure—also known as a mortgage deficiency or deficiency balance—occurs when a home or property is foreclosed on and the sale proceeds are not sufficient to pay off the mortgage. The remaining balance owed on the mortgage is a deficiency balance or mortgage deficiency.

Laws vary from state to state and a state’s laws and the terms of the mortgage may determine whether the mortgage lender (bank or mortgagee) will pursue a mortgagor who defaulted on a mortgage for any deficiency balance.

In Georgia, if a property is foreclosed upon and the sale does not generate enough funds to cover the outstanding mortgage balance, the lender may seek a deficiency judgment against the borrower for the remaining amount. This is known as a deficiency balance. Georgia is a non-judicial foreclosure state, meaning that lenders can foreclose on properties without going to court, provided they follow the proper legal notice requirements. However, to obtain a deficiency judgment, the lender must file a separate lawsuit after the foreclosure sale. The lender has 30 days after the foreclosure sale to seek this judgment. If the court grants the deficiency judgment, the lender can then pursue collection from the borrower, which may include garnishing wages or levying bank accounts. It's important for borrowers in Georgia to understand that they may still be liable for a mortgage deficiency after a foreclosure sale and should consult with an attorney to understand their rights and potential liabilities.