Foreclosure

===United Kingdom===
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In the [[United Kingdom]], foreclosure is a little-used remedy which vests the property in the mortgagee with the mortgagor having neither the right to any surplus from the sale nor liability for any shortfall. Because this remedy can be harsh, courts almost never allow it especially if a large surplus is likely to be realised, furthermore when a substantial surplus is unlikely to be realised then mortgagees are disinclined to seek foreclosure in the first place since that remedy leaves them no recourse to recover a shortfall. Instead, the courts usually grant an order for possession and an order for sale, which both mitigates some of the harshness of the repossession by allowing the sale while allowing lenders further recourse to recover any balance owing following a sale.

The United Kingdom foreclosure system is unique and true foreclosures are quite uncommon. More commonly, lenders pursue a process called mortgage possession (or alternatively, "repossession" in cases where the bank originally sold the property too).

Both mortgage (re)possession and foreclosure are quite similar, with the main differences being the treatment of any funds that exceed the amount borrowed and liability for any shortfall. In the case of mortgage possession or repossession, if the home is sold or auctioned for a price that exceeds the loan balance, those funds are returned to the consumer. If the proceeds from a mortgage possession are insufficient to cover the loan then the debtor remains liable for the balance, although in most cases this will become an unsecured debt and the mortgage company will be treated on an equitable basis with the debtor's other unsecured creditors (particularly if the debtor simultaneously or subsequently becomes bankrupt or enters into a voluntary arrangement with creditors). By contrast, in the case of foreclosure the mortgage company retains all rights to proceeds from a sale or auction but the debtor is not liable for any shortfall.

The UK foreclosure and mortgage possession/repossession system favors consumers over lenders, as the United Kingdom has some pre-action protocols in place. Mortgage companies are required to work with homeowners to arrive at a resolution and it is possible to delay court action (ultimately, enabling many to avoid the loss of their home) in situations where the borrower has enrolled in individual programs or if the borrower's income is about to improve significantly with a new job or other measures that would allow them to pay off the arrears.

There is no precise parallel to an American short sale, although the UK does have a process known as Assisted Voluntary Sale. An Assisted Voluntary Sale does have some negative credit impact for the consumer, but the adverse effect is less pronounced than one might suffer if the case were to proceed to the courts.