What does the term 'deficiency' refer to in a mortgage context?

In the context of a mortgage, the term 'deficiency' specifically refers to the balance owed by the debtor to the creditor after a property has been foreclosed and sold. When a property is taken back by the lender in a foreclosure, it is typically sold at a price lower than the outstanding mortgage balance. The remaining balance that the borrower still owes after the sale is the deficiency. This is a crucial concept because it determines the financial responsibility of the borrower even after the property has been lost. Understanding this term is important for both lenders and borrowers, as it impacts the resolution of debts and potential legal actions that may follow a foreclosure.