Since the housing bubble burst in 2008, the term foreclosure has been in the news a lot. People have analyzed and reanalyzed the foreclosure rates across the country and what it means for average Americans. Every quarter a reports come out in Tennessee and across the country that explain whether the rate has gone up or down. However, for many Tennessee residents, foreclosure is more than a rate or a news story, it is a very real possibility that they are facing.

Foreclosure is the process by which a mortgage holder reclaims property in order to repay the mortgage owed to them. In other words, a foreclosure is the legal process that creditors can use to get title to property they have a security interest in to satisfy the debt owed to them. While this process has been allowed for hundreds of years in the legal system, it is highly regulated. The specific method of foreclosure available and the requirements to legally foreclose vary from state to state.

However, in the United States, there are two main types of foreclosure — foreclosure by power of sale and foreclosure by judicial sale. Foreclosure by power of sale allows a bank to foreclose on a property without the supervision of a court. After the property is sold, the proceeds go to the foreclosing mortgage holder, then to any other lien holders then if any money remains to the property owner. This is only available in some states.

The other method of foreclosure — foreclosure by judicial sale — is available in every state. This is the process of foreclosing during a judicial action. Here, specific notice is required to foreclose which happens after pleadings have been filed and a trial has been held. The payment method is the same as it is in a power of sale foreclosure.

Source:, “What is Foreclosure?,” accessed Sept. 8, 2014