Deficiency Judgment Calculator

Deficiency judgment exposure varies by state; many states limit or bar deficiency.

Loan balance at foreclosure

Foreclosure sale price

Fair market value % (anti-def)

Fees and costs

Deficiency allowed?

Deficiency amount

$83,000

Borrower risk exposure

$83,000

Shortfall

$83,000

How the math works

Shortfall = balance + fees − credit (max of sale price, fair market value).

$350k + $8k − $275k = $83k shortfall (deficiency). Anti-def state: $0 borrower exposure.

How to Use

Enter loan balance at foreclosure.
Enter foreclosure sale price.
Enter fair market value % (anti-def).
Enter fees and costs.
Enter deficiency allowed?.
Read deficiency amount.

Frequently Asked Questions

Deficiency landscape?

Anti-deficiency states (1st lien purchase mortgage): AK, AZ, CA, MN (residential), MT, NC, ND, OR, WA. Limited deficiency: NV (fair value test), TX (judicial only), AZ (fair value), most others. Allowed without limit: most states for HELOCs and 2nd liens. Even in allowed states, lender pursues only if borrower has assets — judgment-proof borrower no recovery. Deficiency timeline: 1–7 years post-foreclosure to pursue. Tax: forgiven deficiency = cancellation of debt income unless exclusion applies.

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.