In what situation is a deficiency judgment typically pursued by a lender?

A deficiency judgment is pursued by a lender when the foreclosure sale price is less than the outstanding mortgage balance. This situation arises when a borrower defaults on their loan, and the property is sold at a foreclosure auction for an amount that does not cover the total debt owed on the mortgage. The lender can seek a deficiency judgment to recover the remaining balance by filing a lawsuit against the borrower for the difference between the sale price and the outstanding loan amount.

In California, this is particularly relevant because, in a non-judicial foreclosure, lenders can pursue a deficiency judgment only in specific situations, such as when a purchase money loan is involved. Thus, if the foreclosure results in a shortfall, the lender has the legal right to seek this type of judgment to mitigate their financial loss.

The other situations presented in the options do not typically lead to deficiency judgments. For instance, if a borrower files for bankruptcy, the lender must follow procedures specified by bankruptcy law, which can temporarily halt their ability to collect on debts. A short sale occurs when a homeowner sells their property for less than the mortgage balance, but lenders often negotiate with homeowners to release them from further liability without pursuing a deficiency judgment. Lastly, evictions relate more to the rental agreements rather than mortgage debts