When you lose your home to foreclosure or are short funds in paying off a debt to your mortgage lender, your mortgage lender may attempt to collect on that difference. If the lender goes to court and sues you and wins, the lender is said to have obtained a deficiency judgment against you. With that deficiency judgment, the lender can go after any other assets you may have. For example, if you own a home that was worth $250,000 with a $225,000 mortgage debt on it and you default on the loan and the lender forecloses on the home and sells the home for $175,000, the lender is out $50,000. The lender may then go to the court and ask the court to give the lender a judgment against you for $50,000 which the lender can then use to go after any other assets you may have. That judgment would be the deficiency judgment. Some states do not allow deficiency judgments.
While anti-deficiency laws will protect a homeowner in some cases, the vast majority of Americans have recently obtained two mortgage loans in the purchase of homes, often referred to as a "piggy-back mortgage." If the first mortgage loan is foreclosed and the amount of the sale is enough to only pay off the first lender, the second lender will be entitled to sue the owner for the value of its loan. Many anti-deficiency laws won't protect the homeowner for amount owed on the second mortgage.