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Simple English definitions for legal terms
power-of-sale foreclosure
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A quick definition of power-of-sale foreclosure:
A power-of-sale foreclosure is a legal process used by a lender to take back a property when the borrower has not paid their mortgage. This process allows the lender to sell the property without going to court, which can be faster and less expensive. It is used in more than half of the states in the United States.
A more thorough explanation:
A power-of-sale foreclosure is a legal process used by a lender (mortgagee) to terminate a borrower's (mortgagor's) interest in a property. This process is used to either gain title to the property or force a sale to pay off the unpaid debt secured by the property. It is a nonjudicial foreclosure method that does not require court involvement.
For example, if a borrower defaults on their mortgage payments, the lender can initiate a power-of-sale foreclosure. The lender can sell the property at a public auction without going through the standard legal steps required in a judicial foreclosure. This process is authorized and used in more than half of the states.
Another example is if a borrower fails to pay their property taxes, the public authority can seize and sell the property through a tax foreclosure. This is different from a power-of-sale foreclosure, but it is another example of a legal process used to terminate a borrower's interest in a property.