A foreclosure refers to a proceeding that is normally carried by a bank or a creditor where the property is repossessed as agreed in the terms and conditions of the agreement. The property is normally repossessed due to the inability of the borrower to pay the full loan amount. The borrower has failed to comply with the deed of trust which is commonly called mortgage. A foreclosure also happens due to default on part of the borrower in payment of a promissory note that has been secured for some property.

The mortgage holder can start the foreclosure process in case the buyer fails to pay the loan on a specified date. The holder can start the proceedings any time after the borrower defaults in his payment. There are generally two types of foreclosures undertaken and those are foreclosure by judiciary sale or foreclosure by auction sale. In case of foreclosure by judiciary sale the court decides on the terms of the foreclosure.

The proceeds are first used to cover the mortgage, followed by the other lien holders and finally the mortgagor in the end.

If the foreclosure is by power of sale, the mortgage holder will carry the formalities of sale of property and there is no interference from the court. Foreclosure by power of sale is always preferred than foreclosure by judiciously proceedings because of less and effort required by the former. The proceeds are first taken up by the mortgage holder and then by the lien holders followed by the mortgagor.

Apart from the tow major types of foreclosures stated above, there are other minor types of foreclosures in countries such as the USA. These small foreclosures have a very limited scope than the two major types. One good example of a minor foreclosure is the strict foreclosure in which case the mortgagor is liable to pay a certain amount of money within a certain time to the lender of the proceeds. The order to pay the amount is given by the court. If the mortgagor does not pay the amount within the specific time, the mortgage holder gets the right to own the property. Strict foreclosure was practiced since a long time but over the last couple of years it has lost its significance.

The amount to be released during the foreclosure proceedings is known as acceleration. The mortgage holder gets the right to claim and recover his debts through the acceleration clause. The mortgage holder gets the right to ask the borrower for any unpaid amounts.

Today all foreclosures have an acceleration clause. However the acceleration clause is not imposed in the act. The foreclosure process does take a lot of time. However, today many people use websites to solve the case instead of engaging the judiciary to solve the case. In the last few years there have been a lot of cases of foreclosure in the United States alone.