A deficiency judgment is a court judgment against a borrower for the difference between what they owed on a loan and what a foreclosure sale actually brought in, when the sale price does not cover the debt. In Tennessee, a lender suing for a deficiency benefits from a legal presumption that the sale price reflected fair market value, which the borrower has to overcome with evidence.
Why it matters
A low sale price at foreclosure can leave you owing money on a house you no longer own.
In Tennessee: Tenn. Code Ann. § 66-8-101. This can work differently in another state.
General information, not legal or tax advice.