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What is Strict Foreclosure?
Strict foreclosure is foreclosure without a sale. Instead of going to auction, the title of the house goes directly back to the mortgage lender.

Once the lender has the title of the house, it can sell the house through a real estate agent. Proceeds from the sale of the house would go towards paying off the default amount of the former homeowner's mortgage loan.

However, if the proceeds of the sale are not enough to cover the owed amount, a deficiency judgment is issued to the former homeowner.

For example, if a home sells for $80,000 and the balance on the mortgage loan was $100,000, the former homeowner is still liable for the $20,000 difference.

Deficiency judgments as well as the foreclosure itself could do severe damage to the homeowners' credit.

 
 
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