What is a deficiency judgment?
A deficiency judgment is a court order requiring a borrower to pay the shortfall between a foreclosure sale price and the outstanding loan balance; Ohio permits lenders to pursue deficiency judgments on most mortgage loans.
When a lender forecloses on a property in Ohio and the sale proceeds fall short of what the borrower still owes on the loan, the difference is called a deficiency. A deficiency judgment is a court order that holds the borrower personally liable for that gap. If the lender obtains such a judgment, they can pursue collection against the borrower's other assets, wages, or bank accounts.
Ohio law generally allows lenders to seek deficiency judgments on first mortgage loans unless the property is a single-family, owner-occupied home that was purchased primarily for personal use (in which case the deficiency is capped at the difference between the loan balance and the fair market value of the property at the time of foreclosure, not the sale price). On investment properties, second mortgages, and other loan types, lenders in Ohio have broader rights to pursue full deficiencies.
This consequence makes deficiency exposure a significant factor in foreclosure cases. Borrowers facing foreclosure should understand whether they are at risk of a deficiency judgment and what protections or defenses may apply under Ohio law. Consultation with a foreclosure defense attorney can clarify the specific risks and options in your situation.