In terms of a mortgage, a deficiency is the difference between the amount you owe on the loan and the fair market value of the property. If your home is seized by the bank and it is worth less than you owe, the lender may try to hold you liable for the deficiency by asking the court to issue a deficiency judgment. There are laws in place in California that prohibit lenders from pursuing deficiency judgments against borrowers in certain situations, so you might consider consulting an attorney to find out if you are responsible for the deficiency.