In the world today many people own houses through mortgages. A mortgage is a written agreement by which a person gives up his or her right to a property as a security to secure loan if such a loan is repaid within a stipulated time limit. However, there are situations which may warrant a morgagee to obtain a court order in order to terminate the right of redemption of the mortgagor. Such a case is technically called foreclosure.

There are some situations that can lead to foreclosure. One of the causes of foreclosure is if the lender discovers that the borrower has defaulted. Due to the right of redemption given to the borrower by the court the lender cannot reposes the property. The only option available to lender is to foreclose the aforementioned equitable right of redemption. This is because as long as the right of redemption is valid, the lender is not sure whether he can repose the property successfully.

There are other factors that can give rise to foreclose. Such factors as unpaid bills and overdue taxes can also make a lender to seek for foreclosure. However, there are processes which the lender has to pass through before the property used as mortgage can be resold.

Foreclosure can be of different types. One of the types of foreclosure is known as judicial sale. This is one of the types of foreclosure that is commonly used in the United States of America and Canada. It can also be called judicial foreclosure. As the name suggests the sale of a mortgage property is done under the supervision of a law court. Judicial foreclosure is available in every state. In judicial foreclosure the lender seeks for foreclosure in the law court. Before the proceeding starts all the parties involved will be informed and there is normal court hearing. However, the law guiding the notification process vary from state to state. That is why it is normally filed in state court though in some few circumstances it can be filed in federal court.

There is another type of foreclosure known as power of sale or nonjudicial foreclosure. This type of foreclosure allows a lender to sell a mortgage property without the any pronouncement from the court. This is allowed in some states like California. However, before this is done, in the mortgage agreement the power of sale should be included in it. In place of power of sale, a deed of trust clause should be added in the agreement. Power of sale favours the lender more than the borrower in the sense that it is easier to resell the property. It is also cheaper than judicial foreclosure.

Besides the above mentioned types of foreclosure which are the most popular, there are other types of foreclosure. Such foreclosure includes “strict foreclosure” and they are not common. Only a few states use it. It will be to your advantage if you know all these types of foreclosure before entering into mortgage agreement.