You just finished the foreclosure process but the asset securing the loan was not worth enough to recover the entire amount of the debt. What happens now that there is a deficiency? Depending on the jurisdiction, a lender may be able to file for a deficiency judgment against the borrower or any guarantors. A deficiency judgment allows a lender (or mortgagee) to recover the remaining debt against the borrower and any guarantors following a foreclosure sale.

Many states restrict a lender’s ability to obtain a deficiency judgment, and some states do not allow a deficiency judgment following a non-judicial foreclosure. Because the procedure for computing the amount of deficiency judgments is state-specific, this article will focus solely on what you need to know about the deficiency computation process in Massachusetts and New York.

Read more from attorneys Alexander Berger, Rajinder Saini, and Chuck Jacob in CityBiz.