What is the primary function of a deficiency judgment?

The primary function of a deficiency judgment is to recover the unpaid balance of a loan after a property has been foreclosed upon. When a borrower defaults on a mortgage, the lender can initiate foreclosure proceedings to sell the property and recover the funds owed. However, in some cases, the sale of the property may not cover the entire amount of the outstanding loan.

A deficiency judgment is then issued by the court, allowing the lender to pursue the borrower for the remaining balance. This legal mechanism enables lenders to collect any unpaid amounts that remain after the collateral (the property) has been sold.

Understanding this function is crucial for both borrowers and lenders, as it highlights the potential financial obligations borrowers may face even after losing their property through foreclosure.