Statutory foreclosure, also known as power-of-sale foreclosure, is a lawful procedure that allows a lender to acquire a property and sell it in order to recoup the outstanding debt on a mortgage or loan. This process is sanctioned by the law and typically involves a public auction of the property.
Statutory foreclosure, also known as power-of-sale foreclosure, is a legal process authorized by state law that allows a lender to take possession of a property and sell it in order to recover the money owed on a mortgage or loan. This process is initiated when a homeowner fails to make mortgage payments. The lender can then sell the property at a public auction and use the proceeds to pay off the outstanding debt. Unlike judicial foreclosure, which requires the lender to obtain a foreclosure order from the court, statutory foreclosure is a faster and less expensive option for the lender. However, it offers fewer protections for the homeowner.
Statutory foreclosure is a legal process by which a lender can take possession of a property and sell it in order to recover the balance of a defaulted loan.
Statutory foreclosure does not require court involvement, while judicial foreclosure involves the lender filing a lawsuit to obtain a court order to foreclose on the property.
The specific steps can vary by state, but generally involve the lender providing notice to the borrower, conducting a public auction, and transferring ownership of the property to the highest bidder.
Borrowers have the right to receive notice of the foreclosure proceedings and to potentially cure the default by paying off the overdue amount before the foreclosure sale.
Borrowers may be able to stop a statutory foreclosure by paying off the overdue amount, negotiating a loan modification, or filing for bankruptcy.
Any excess proceeds from a foreclosure sale are typically returned to the borrower, if there are no other liens or claims on the property.
In some states, lenders can pursue a deficiency judgment if the sale proceeds do not fully cover the outstanding loan balance.
Borrowers and lenders may be able to pursue alternatives to foreclosure, such as a short sale, deed in lieu of foreclosure, or loan modification.
A statutory foreclosure can result in the loss of the property and damage to the borrower’s credit.
It is advisable to consult with a lawyer if you are facing a statutory foreclosure, as they can provide guidance on your rights and options.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 16th April 2024.
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