Foreclosure is a legal process whereby property pledged as security for a debt is sold to pay the debt in the event of a default.
:: Strict foreclosure ::
A type of judicial foreclosure, in which the court does not sell the property. Instead, the court gives title to the lender and ends the debt. However, this process also eliminates all redemption rights, deficiency judgments and any surplus compensation to the borrower. This is not commonly used.
:: Tax foreclosure ::
The sale--usually through public auction--of properties that have not paid delinquent property taxes. Most local taxing authorities assure themselves of property tax revenue by selling delinquent property taxes to investors. These investors or the taxing authority can then exercise their rights to foreclose on the property. However, property owners may be able to rescue their homes by exercising their equitable or statutory rights of redemption.
:: Deed in Lieu of foreclosure ::
A real estate
deed used to convey title to a property from the current owner to the owner's lender or creditor. This deed is normally used when the current owner is in default or foreclosure proceedings. By voluntarily surrendering the property, both parties avoid the costs and delay of further legal proceedings. The lender receives title without going through the usual court and auction process; in exchange, the loan is terminated. Similar to the power of sale clause, this is a type of non-judicial foreclosure .
:: Judicial foreclosure ::
Also called foreclosure by sale, this type of foreclosure uses the courts to take the title of the collateral property away from the mortgagor. The two most common types of judicial foreclosures are judicial sales and strict foreclosures.
:: Non-Judicial foreclosure ::
A type of foreclosure that does not involve the courts. Unlike judicial foreclosures, this process usually gives the lender the title to the subject property (deed in lieu of foreclosure ) or the power to sell the property (power of sale clause).