Deficiency Judgment with a Successful Short Sale vs. Foreclosure

Deficiency Judgment is defined as the amount for which the borrow is personally liable on a note and mortgage if the foreclosure sale does not bring enough to cover the debt. The judgment is for the total amount and not for the deficiency, the recovery from the foreclosure sale being deducted from this amount.

Deficiency Judgment
Foreclosure-In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment.
Successful Short Sale-In some successful short sales it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.

Deficiency Judgment (amount)
Foreclosure-In a foreclosure the home will have to go through a REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment.
Successful Short Sale-In a properly managed short sale the home is sold at a price that should be close to market value and in almost all cases will be better than a REO sale resulting in a lower deficiency.