What is a deficiency judgment?
A deficiency judgment is a court order requiring a borrower to pay the lender the difference between the foreclosure sale price and the total debt owed on the mortgage.
When a foreclosure sale in Connecticut produces less money than the borrower owes on the mortgage, the lender may seek a deficiency judgment to recover the shortfall. This is a separate court judgment that creates a new debt obligation against the borrower for the unpaid balance, and the lender can then pursue collection through wage garnishment, bank levies, or other remedies.
Connecticut law provides important protections for borrowers facing deficiency judgments. A borrower has the right to request a valuation hearing before the lender can obtain a deficiency judgment. At this hearing, a court appraises the fair market value of the foreclosed property and uses that value, rather than the actual sale price, to calculate any deficiency. If the property sold for significantly less than its market value, the valuation hearing can substantially reduce or eliminate the deficiency amount owed.
Deficiency judgments are a key concern in foreclosure defense. Many borrowers are unaware they can remain liable for thousands of dollars after losing their home, or that they have the right to challenge the amount through a valuation hearing. An attorney defending a foreclosure can help preserve this right and present evidence of the property's true market value to minimize or avoid the deficiency altogether. For borrowers seeking to understand their full liability or negotiate a resolution, consulting with foreclosure defense providers is important.