A deficiency judgment occurs when:
Why The foreclosure sale price is less than the outstanding mortgage balance, and the lender sues the borrower for the difference Is Correct
Answer A: The foreclosure sale price is less than the outstanding mortgage balance, and the lender sues the borrower for the difference
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
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Key Terms to Know
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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