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.

And if a mortgage lender (bank or mortgagee) files a lawsuit against a mortgagor (debtor) who defaulted on a mortgage, the lender may obtain a court judgment known as a deficiency judgment. With this judgment the lender can try to garnish the debtor’s wages or go after the debtor’s other assets for payment or satisfaction of the deficiency judgment.

A deficiency judgment may be discharged in Chapter 7 or Chapter 13 bankruptcy.

Laws vary from state to state and a state’s laws and the terms of the mortgage may determine whether the mortgage lender will pursue a mortgagor who defaulted on a mortgage for any deficiency balance.

In Oklahoma, if a property is foreclosed and the sale does not cover the outstanding mortgage balance, the lender may pursue a deficiency balance or mortgage deficiency from the borrower. Oklahoma allows lenders to seek a deficiency judgment against the borrower for the remaining balance owed. This means that after the foreclosure sale, if there is a shortfall, the lender can file a lawsuit to obtain a judgment for the deficiency. If the lender is successful, they may use legal means such as wage garnishment or seizing other assets to satisfy the judgment. However, borrowers have the option to discharge the deficiency judgment in bankruptcy under Chapter 7 or Chapter 13. The specific rights and remedies available to both lenders and borrowers can be influenced by the terms of the mortgage contract and the applicable state statutes. It is important for borrowers facing foreclosure to understand their rights and potential liabilities under Oklahoma law.