To the extent a loan is secured by the property, the process allows the lender to sell the property and apply the proceeds in full or partial satisfaction of the borrower’s unpaid debt. Foreclosure requirements are generally established by state law, and each state has its own statutes, rules, and court decisions pertaining to foreclosures.
For this reason, a financial institution needs to understand the foreclosure procedures and documentation practices for each state in which it operates. Some 23 states, known as judicial foreclosure states, require foreclosures to be reviewed and approved by a court in advance.