Check Your Understanding Answers
- Define foreclosure.
A foreclosure is a legal procedure in which the property that is used as security for a debt is sold to satisfy the debt in the event of a default.
- What three types of foreclosure processes enforce mortgage liens?
- judicial foreclosure
- non-judicial foreclosure
- strict foreclosure
- Explain when a judicial foreclosure is used and how a lender files a suit.
Judicial foreclosures occur in states that use a two-party mortgage document (borrower and lender) that does not contain a "power of sale" provision.
Without a power of sale provision, a lender must file a foreclosure suit and undertake a court proceeding to enforce the lien.
- What is a deficiency judgment?
Any outstanding debt remaining after foreclosure and sale of a property is known as a deficiency judgment.
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