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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 Mississippi, 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 balance, known as the deficiency balance. Mississippi law allows lenders to pursue deficiency judgments following both judicial and non-judicial foreclosures. However, the pursuit of a deficiency judgment must be initiated within one year after the sale of the property. The amount of the deficiency judgment may be limited if the borrower can show that the foreclosure sale price was significantly below the property's fair market value. Borrowers facing a potential deficiency judgment may have legal defenses or may be able to negotiate with the lender for a waiver or reduction of the deficiency balance.

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Real property

deficiency balance on foreclosure

Individual & Family Legal Plan

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Mississippi State Code

Mississippi State Code

Real property

deficiency balance on foreclosure

Articles