What is Foreclosure by Power of Sale?

Foreclosure power of sale gives the lender the right to sell your property without going through the court system. Here are the basics of foreclosure by power of sale and how it works.

Foreclosure by Power of Sale

Many states have the ability to conduct foreclosure by power of sale. Whenever a borrower goes into default, the lender can automatically notify them that the property will be sold. The lender can then have an auction and sell the property. The proceeds from the sale will first go to lender, then any other lien holders, and then the homeowner.

Why It Is Used

Many lenders prefer to use this form of foreclosure because they do not have to take the time that is typically necessary to go through the courts. This can save them a substantial amount of time and money and helps them recoup their costs on the loan. It is also much easier to sell the property. Being able to avoid the courts is also much less expensive for the mortgage lender. Therefore, in the states in which this process is allowed, it will be the foreclosure method of choice for lenders.