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 South Carolina, 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 or mortgage deficiency. South Carolina law permits lenders to file a separate lawsuit to obtain a deficiency judgment within three months after the foreclosure sale. However, the borrower has the right to be present in court and argue that the property's fair market value is higher than the sale price, potentially reducing the deficiency balance. The court will determine the fair market value and, if it is found to be higher than the sale price, the deficiency judgment will be adjusted accordingly. It is important for borrowers facing foreclosure in South Carolina to understand their rights and obligations under state law and to consider seeking advice from an attorney to navigate the process and potential outcomes.