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Real property

deficiency balance on foreclosure

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 Virginia, 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. Virginia law allows lenders to pursue this deficiency if they choose to do so. However, the lender must follow specific procedures to obtain a deficiency judgment, including providing proper notice to the borrower and obtaining a court judgment. The time frame for seeking a deficiency judgment in Virginia is generally within two years after the foreclosure sale. Borrowers should be aware that even after a foreclosure, they may still be responsible for any mortgage deficiency, depending on the lender's actions and the court's decision.

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Real property

deficiency balance on foreclosure

Individual & Family Legal Plan

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Virginia State Code

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Real property

deficiency balance on foreclosure

Articles