The state in which I live, California, has an antideficiency
protection law in place. This means that if a bank forecloses on a
house and sells it in foreclosure for less than the balance due on the
mortgage loan that the bank/lender is responsible for the shortfall. Is there
such an antideficiency protection in Vermont or is the borrower at risk?

Hello.

There isn't anti-deficiency protection in Vermont.  The borrower is
liable for any deficiency.


Source: Vermont Statutes Online

"§ 4532. POWER OF SALE; PROCEDURES; NOTICES; FORMS
(g)...
... the mortgagor shall be liable for any deficiency as determined by
a subsequent action for a deficiency judgment."
Source: Vermont Statutes
http://www.leg.state.vt.us/statutes/fullchapter.cfm?Title=12&Chapter=163


Also see this explanation from 2-stop-foreclosure.com:

"In Vermont a lender may sue the borrower to collect deficiency if the
foreclosure sale under the deed of trust was not sufficient to repay
the loan plus the foreclosure expenses. However, if the lender buys at
the foreclosure sale, the borrower can force the lender to credit the
fair market value of the property against the total amount owed, which
includes the loan balance and the foreclosure expenses. If the
foreclosure sale generates a surplus, junior lien holders and
creditors may claim it up to the amount owed in the order of their
priority."
source: 2-stop-foreclosure.com
http://www.2-stop-foreclosure.com/states/vermont.htm


Here's an excerpt from an article that lists the states that do have
anti-deficiency laws:

"Eight states prohibit, or at least make it difficult for lenders to
seek, deficiency judgments against borrowers in the event of a deficit
at foreclosure.[6]
...  
6. The eight states are Alaska, Arizona, California, Minnesota,
Montana, North Dakota, Oregon, and Washington."
Source: "Deficiency Judgments and Borrower Maintenance: Theory and
Evidence"
Journal of Housing Economics, 9(4), December 2000, 267-286 
Cached by Google:
http://216.239.57.100/search?q=cache:B7P1zI6RF18C:www.sba.uconn.edu/RealEstate/Publist%2520articles/Deficiency%2520Judgements%2520and%2520Borrower%2520Maintenance.pdf++%22anti+deficiency%22+laws+&hl=en&ie=UTF-8&client=googlet
Or in PDF format:
http://www.sba.uconn.edu/RealEstate/Publist%20articles/Deficiency%20Judgements%20and%20Borrower%20Maintenance.pdf


search strategy: 
deficiency, foreclosure, liable, vermont
states, "deficiency judgments", borrowers, lenders

I hope this helps.

Thanks to you for a very complete and helpful answer. The inclusion of
the search strategy was good to see.