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 Idaho, if a property is foreclosed upon and the sale does not generate enough funds to cover the outstanding mortgage balance, the lender may have the right to seek a deficiency judgment against the borrower for the remaining amount. This is known as a deficiency balance or mortgage deficiency. Idaho law allows lenders to pursue deficiency judgments following both judicial and non-judicial foreclosures. However, there are certain limitations and requirements that must be met. For instance, after a non-judicial foreclosure sale, the lender must file a lawsuit to obtain a deficiency judgment within three months. Additionally, the amount of the deficiency judgment may be limited to the difference between the total debt owed and the property's fair market value at the time of the sale. Borrowers should be aware that Idaho's anti-deficiency laws provide some protections, such as prohibiting deficiency judgments for purchase-money mortgages on owner-occupied residential properties with four or fewer units. It is important for borrowers facing foreclosure to consult with an attorney to understand their rights and obligations under Idaho law.