Who is eligible for a deficiency judgment?

A deficiency judgment is a court ruling that allows a lender (the mortgagee) to recover the difference between what is owed on a mortgage and the amount received from the sale of the property after foreclosure.

In this scenario, the mortgagee has the right to seek a deficiency judgment because they are the party owed the mortgage debt. If the foreclosure sale does not cover the full amount of the loan, the mortgagee may file a lawsuit against the mortgagor to obtain a judgment for the remaining balance. This process helps ensure that the lender can recover their losses, which can be significant if property values have declined.

On the other hand, the mortgagor, or borrower, is the party who took out the mortgage and is generally the one in a financial position that leads to foreclosure. While they might be impacted by a deficiency judgment, they are not the ones who are eligible to seek it. Similarly, the trustee and trustor roles pertain primarily to the management and ownership of the property rather than the financial obligations stemming from the mortgage itself. The trustee manages the trust property, while the trustor is the one who creates the trust, but neither of these roles is directly related to the request for a deficiency judgment.