If a lender takes possession of your home through foreclosure, it will attempt to sell your home. It will then use the proceeds of your sale to pay off your debt. Sometimes, lenders can’t sell foreclosed homes at a price high enough to cover all the debt that borrowers still owe on their mortgae loans. When that happens, the lender takes a loss on the sale. That loss is known as a deficiency.If your lender sells your home for less than what you still owed on your loan, a local court might file a legal action known as a deficiency judgment against you.