Foreclosure

===Nonjudicial===
Historically, the vast majority of judicial foreclosures have been unopposed, since most defaulting borrowers have no money to hire counsel. Therefore, the U.S. financial services industry has lobbied since the mid-19th century for faster foreclosure procedures that would not clog up state courts with uncontested cases, and would lower the cost of credit (because it must always have the cost of recovering collateral built-in).{{Citation needed|date=November 2011}} Lenders have also argued that taking foreclosures out of the courts is actually kinder and less traumatic to defaulting borrowers, as it avoids the ''[[in terrorem]]'' effects of being sued.{{Citation needed|date=November 2011}}

In response, a slight majority of U.S. states have adopted nonjudicial foreclosure procedures in which the mortgagee (or more commonly the mortgagee's servicer's attorney, designated agent, or trustee) gives the debtor a notice of default (NOD) and the mortgagee's intent to sell the real property in a form prescribed by state [[statute]]; the NOD in some states must also be recorded against the property. This type of foreclosure is commonly called "statutory" or "nonjudicial" foreclosure, as opposed to "judicial", because the mortgagee does not need to file an actual lawsuit to initiate the foreclosure. A few states impose additional procedural requirements such as having documents stamped by a court clerk; Colorado requires the use of a county "public trustee," a government official, rather than a private trustee specializing in carrying out foreclosures. However, in most states, the ''only'' government official involved in a nonjudicial foreclosure is the county recorder, who merely records any pre-sale notices and the [[Trust deed (real estate)#Power of sale and trustee's sale|trustee's deed upon sale]].

In this "power-of-sale" type of foreclosure, if the debtor fails to cure the default, or use other lawful means (such as filing for [[bankruptcy]] to temporarily stay the foreclosure) to stop the sale, the mortgagee or its representative conduct a [[public auction]] in a manner similar to the sheriff's auction. Notably, the lender ''itself'' can bid for the property at the auction, and is the ''only'' bidder that can make a "credit bid" (a bid based on the outstanding debt itself) while all other bidders must be able to immediately (or within a very short period of time) present the auctioneer with cash or a cash equivalent like a [[cashier's check]]. 

The highest bidder at the auction becomes the owner of the real property, free and clear of interest of the former owner, but possibly encumbered by liens superior to the foreclosed mortgage (e.g., a senior mortgage, unpaid property taxes, weed/demolition liens). Further legal action, such as an [[eviction]], may be necessary to obtain possession of the premises if the former occupant fails to voluntarily vacate.
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