If you lose your home in West Virginia to a foreclosure, but the foreclosure sale price is less than the amount you owe on your mortgage loan, the foreclosing party (the "bank") can get a deficiency judgment.
In the past, homeowners in West Virginia were able to get an offset in the amount of the deficiency judgment if the property sold for less than its fair market value at the foreclosure sale. However, the state legislature passed a law prohibiting a borrower from getting this reduction in the deficiency amount.
What Is a Deficiency Judgment?
If a property sells at a foreclosure sale for less than the full outstanding mortgage debt, the difference is commonly called a "deficiency balance." Some states allow a foreclosing bank to get a deficiency judgment (a personal judgment) against the borrower for the amount of the deficiency balance.
Example of a Mortgage Deficiency in a West Virginia Foreclosure
Suppose Westley gets a loan from a bank in the amount of $300,000 to buy a home. A few years later, he stops making payments after losing his job. The bank forecloses, and the property sells for $275,000—but Westley still owes $290,000 on the loan. The deficiency is $15,000 ($290,000 minus $275,000).
What Are the Legal Requirements for Deficiency Judgments in West Virginia?
To get a deficiency judgment after a nonjudicial foreclosure, the bank must file a lawsuit against the borrower. (W. Va. Code § 38-1-7 (2025).) To get a deficiency judgment in a judicial foreclosure, the bank must seek the deficiency in the same lawsuit as the foreclosure.
Developments in West Virginia Deficiency Judgment Law
In 2014, the Supreme Court of Appeals of West Virginia held in Sostaric v. Marshall that a borrower facing a deficiency judgment could get an offset in the deficiency amount if the property's fair market value was greater than the foreclosure sale price. To get the offset, the defendant had to affirmatively assert that the fair market value was more than the foreclosure sale price as a defense in the deficiency action (Sostaric v. Marshall, No. 14-0143, Supreme Court of Appeals of West Virginia (November 12, 2014)).
But Senate Bill 418, effective June 11, 2015, overturned the Sostaric decision and amended West Virginia law (specifically, W. Va. Code § 38-1-7) to prevent a defendant from raising the fair market value of the home as a defense in a deficiency action.
Standard for Setting Aside a Foreclosure Sale West Virginia Due to Excessive Deficiency Amount
Before the Sostaric decision, the court indicated that the standard for setting aside (voiding) a foreclosure sale is whether the foreclosure sale price was so low and so unfair that it "shocked the conscience" of the court. Because Sostaric was overturned, a court will likely use this standard if you ask a court to set aside the sale due to an insufficient sale price.
Do Foreclosures Always Result in a Deficiency?
If the sale price equals or exceeds the mortgage debt amount, there's no deficiency. In fact, if the sale results in surplus funds (more than what's needed to pay off any other liens, like a second mortgage or HELOC), you might be entitled to that extra money following the foreclosure sale.
Getting Help
If you’re facing a foreclosure in West Virginia and want to learn about possible defenses or loss mitigation (foreclosure avoidance) options, like a mortgage modification, short sale, or deed in lieu of foreclosure, consider talking to a foreclosure attorney or a HUD-approved housing counselor.
If a bank is currently seeking or already has a deficiency judgment against you and you want information about whether you can discharge (eliminate) your liability for the debt by filing for bankruptcy, consider talking to a bankruptcy attorney.