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 West 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 or mortgage deficiency. West Virginia Code §38-1-3 allows lenders to pursue deficiency judgments following a foreclosure sale. However, the pursuit of such judgments must adhere to specific procedures and timelines. The lender must file a motion for a deficiency judgment within a certain period after the foreclosure sale, typically within one year. Borrowers should be aware that if the court grants a deficiency judgment, the lender can collect the deficiency balance through various means, such as garnishing wages or levying bank accounts. It is important for borrowers facing foreclosure to understand their rights and obligations under West Virginia law and to consult with an attorney for guidance specific to their situation.