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 Kansas, when 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. Kansas is a judicial foreclosure state, meaning that the lender must go through the court system to foreclose on a property. Under Kansas law, the lender has the right to file a lawsuit to obtain a deficiency judgment within a certain period after the foreclosure sale. However, the borrower also has certain protections. For example, if the property was the borrower's residence, the lender must sell the property in a manner that is 'commercially reasonable.' If the sale price is deemed too low, the deficiency judgment may be reduced accordingly. Borrowers should be aware that there may be specific conditions and time frames that apply to their situation, and consulting with an attorney can provide guidance on how to navigate these issues.