A more thorough explanation:

Definition: Fair-value law is a legal rule that allows a credit against a deficiency for the amount that the fair market value of land exceeds the price at foreclosure. This means that if a property is foreclosed and sold for less than its fair market value, the borrower may be entitled to a credit for the difference.

Example: Let's say that John owns a house that he bought for $200,000. He took out a mortgage for $150,000 to pay for the house. Unfortunately, John lost his job and was unable to make his mortgage payments. The bank foreclosed on the house and sold it at auction for $100,000. However, the fair market value of the house was actually $180,000. Under the fair-value law, John may be entitled to a credit of $30,000 ($180,000 - $150,000) against the deficiency judgment that the bank may seek against him for the remaining balance of the mortgage.

Explanation: This example illustrates how the fair-value law works in practice. Even though John's house was sold for less than what he owed on his mortgage, he may still be entitled to a credit for the difference between the sale price and the fair market value of the house. This is because the fair-value law recognizes that the sale price at foreclosure may not always reflect the true value of the property, and seeks to provide some measure of protection for borrowers in this situation.