Legal Definitions - power-of-sale foreclosure

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.