Florida Real Estate Broker ExaminationReal Estate Finance and InvestmentMedium
A homeowner in Florida defaults on their mortgage, and the lender initiates foreclosure proceedings. After the foreclosure sale, the property sells for less than the outstanding mortgage balance. What legal action might the lender pursue to recover the remaining debt?
- ARight of redemption
- BWrit of execution
- CLis pendens
- DDeficiency judgment
Show answer & explanationAnswer & explanation
Correct answer: D. Deficiency judgment
A deficiency judgment allows the lender to recover the difference between the outstanding loan balance and the amount received from the foreclosure sale if the sale proceeds are insufficient.
Why the other options are wrong
- A. The right of redemption allows a homeowner to reclaim their property by paying the full debt before or after foreclosure, not a lender's action.
- B. A writ of execution is a court order to enforce a judgment, not the judgment itself for the remaining debt.
- C. Lis pendens is a notice filed to inform the public that a lawsuit affecting real property is pending.
Deficiency Judgment
A court order requiring a borrower to pay the difference between the outstanding loan balance and the amount the property sold for at foreclosure.
- Lender can pursue if foreclosure sale proceeds are insufficient.
- Can be obtained against the borrower's other assets.
- Not always granted or pursued by lenders, depending on state law and circumstances.
Memory trick: Foreclosure ends; debt remains? Lender seeks 'D'eficiency for the 'D'ifference.