Foreclosure
What Is Deficiency Judgment?
A deficiency judgment is a court order making a borrower personally liable for the remaining debt when a foreclosure sale doesn't cover the full mortgage balance. Michigan, Tennessee, and Florida all allow them.
If a foreclosed home sells for less than what's owed on the mortgage, the gap is called a deficiency. In states that permit it, the lender can pursue a deficiency judgment to collect that remaining amount from the borrower personally.
Michigan, Tennessee, and Florida all allow deficiency judgments, though each has its own limits and time windows. This means foreclosure may not be the end of your financial exposure — you could still owe money afterward.
Selling before foreclosure, including through a short sale or a cash sale that pays off the loan, can help you avoid a deficiency judgment entirely.
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