Strict Foreclosure: What You Should Know

When a home goes into a foreclosure proceeding, it most often forecloses through one of two processes: judicial or nonjudicial foreclosure. However, there’s a third, lesser-known, and less common form of foreclosure available in only a handful of states, called strict foreclosure.

Today, let’s break down strict foreclosure in detail and explore everything you need to know about this foreclosure process.

What Is Strict Foreclosure? 

In a nutshell, a strict foreclosure uses a court order to quickly and forcibly seize property from a homeowner. If the court approves a lender’s strict foreclosure request, the homeowner only gets a certain amount of time to resolve the debt complaint and avoid foreclosure.

If the mortgagee is unable to pay the remaining balance in the specified timeline, the property automatically returns to the lender, who assumes full ownership of the property. This is different from the other foreclosure processes because the lender assumes full ownership prior to an auction of the property.

With a traditional foreclosure, the lender who owns the mortgage tries to auction the property off to recoup its costs through the sale price. The big difference between a traditional foreclosure and a strict foreclosure is that the latter allows the bank full ownership of the property without going through a commercial sale or public auction. 

The Strict Foreclosure Process

Strict foreclosures can make it more difficult for a homeowner to recoup their property in the set timeline because it circumvents the traditional process of auction and gives the lender full ownership of the property. Just like any foreclosure process, the lender has to follow specific steps and protocols to get their strict foreclosure request approved.

The strict foreclosure process is as follows:

  • A homeowner defaults on their loan by not paying their mortgage payments for a period of between three and six months
  • The creditor then transmits a proposal intending to foreclose the property to the debtor. In a traditional real estate situation, the lender notifies the homeowner and any secondary obligors, such as guarantors of the debt or loan cosigners, indicating the deficiency amount.
  • The lender also sends a notice to the court stating their intent to begin a strict foreclosure process.
  • If any party notified objects to the strict foreclosure within 20 days of receiving notice, the strict foreclosure would not be permitted. For example, if homeowners receive notice of strict foreclosure, they can refuse and stop the process in its tracks.
  • If no one objects to the strict foreclosure, the court will likely approve the request, and the lender will set a deadline before which the homeowner must pay off the full amount of their debts and get their mortgage out of default if they want to keep their home.
  • If the homeowner fails to pay the amount of the debt, they will be evicted by the sheriff and forced to relocate.

Some circumstances exist in which lenders cannot legally force strict foreclosures on homeowners. The above objection rule is one of them; it stops homeowners from having their interest in the property’s fair market value cut off too quickly.

Additionally, lenders cannot push strict foreclosures if the borrower has repaid at least 60% of the total loan amount on the mortgage deed. So if you have paid off 60% of your mortgage total, your lender can never force you into acceptance of strict foreclosure.

Why Do Some Lenders Pursue a Strict Foreclosure? 

There are only three real reasons why a lender might desire a strict foreclosure over a traditional foreclosure.

  • The debt amount is greater than the total value of the property. This is very rare in traditional real estate because most properties appreciate with time. But, for example, if a homeowner trashes their own property, a lender may wish to pursue a strict foreclosure to cut costs and simply regain control of the property before more damage is done, even if they won’t recoup their costs for the investment for some time to come.
  • If the lender has a specific use for the property in mind once they remove the homeowner or borrower from the contract. For example, if a homeowner goes into default on their loan and the bank wishes to renovate the land for commercial purposes, they may opt for a strict foreclosure so they can own the property, demolish it, and build a new structure in its place.
  • The lender does not want to go through the hassle of selling the property through a commercial auction before reacquiring ownership of the home. With strict foreclosure, the transfer of the property goes straight to the lender without a sale requirement, as is the case with all other foreclosure processes.

A strict foreclosure is faster, more straightforward, and beneficial to lenders under certain circumstances. 

Other Considerations of Strict Foreclosures

Borrowers should avoid strict foreclosures at all costs because they come with big considerations and limitations.

If a strict foreclosure is approved, the borrower no longer has the right of redemption. That means you will not be able to repurchase the property from the mortgagor as you can with a traditional foreclosure process, even if you acquire the funds necessary to do so. If you wish to purchase your home back, you’ll have to convince the plaintiff to sell it to you, which may be very hard if you have reached a strict foreclosure in the first place.

Furthermore, it may not be possible for you to purchase the home back at any future date unless the property changes hands and goes to another bank or financial institution. In some ways, a strict foreclosure is the most serious type.

How To Stop a Strict Foreclosure 

In any foreclosure situation, it is important to look for options to stop the foreclosure process immediately. There is never a benefit to a foreclosure since the homeowner loses ownership of their property and their credit is greatly impacted. It is important to know and research your options so that you can save your home.

Even though strict foreclosure is considered a different process than judicial and nonjudicial foreclosure, the methods of stopping foreclosure are the same. These methods include:

  • Requesting a forbearance
  • Applying for a loan modification or mediation program
  • Conducting a short sale
  • Signing a deed in lieu of foreclosure 
  • Seeking investment programs

Homeowners may also consider co-investing with Balance Homes. This innovative and effective strategy can help you avoid foreclosure and retain ownership of your home in an affordable and flexible way.

In a nutshell, Balance Homes purchases the equity in your home and gives you up to $50,000 in cash to pay off outstanding debts, in addition to paying off your current mortgage loan. As a co-investor, Balance pays their share of the home's expenses and you will make monthly payments to Balance.

As your financial situation improves, you can purchase additional equity from Balance. You can alternatively refinance your home and exit the co-investment at any time within the 7 year period.

As you can see, this may be a great way to avoid foreclosing on your property or losing ownership entirely. You can check out our website or contact us today for more information.

What States Allow Strict Foreclosures? 

You may not have heard of strict foreclosures because they are very rare. In fact, only two states currently allow strict foreclosures under specific circumstances. Those states are Vermont and Connecticut.

In Connecticut, strict foreclosures are allowed until Law Day. If the strict foreclosure is not pursued or approved then the foreclosure is usually judicial.

In Vermont, it’s the same way. Strict foreclosures are allowed after lenders receive a foreclosure decree by a judge. All other foreclosures are judicial rather than nonjudicial.

If you don’t live in Connecticut or Vermont, you don’t need to worry about your lender trying to force a strict foreclosure because they won’t be able to. Even if you live in these two states, judicial foreclosures are still far more common.

Other Types of Foreclosures

There are two other types of foreclosures aside from strict foreclosures: judicial or nonjudicial foreclosures.

Judicial foreclosures are the most common type throughout the US and are allowed in 28 out of 50 states. With a judicial foreclosure, the court must order the sale of a property to satisfy the terms or requirements of a mortgage.

With a judicial foreclosure, the lender files a lawsuit against the homeowner, and the homeowner is required to pay off their debts by a certain date. If they fail to do so, the property is then sold at an auction, and any proceeds are used to pay off the mortgage, lienholders, and other debts.

Judicial foreclosures are typically long and are not advantageous for either party. Even though a lender may request a judicial foreclosure, they may not be approved. Lenders must prove there is a reason for the foreclosure, so the court agrees with them before the process can begin.

Nonjudicial foreclosures occur in 22 out of 50 states and are possible if a mortgage has a “power of sale” clause. They may also be preferred in states where deeds of trust are used instead of mortgages.

With nonjudicial foreclosure, the lender has the right to foreclose on the property without getting the approval of a court first. They are still required to make a formal notification to the homeowner, but the deadline before a homeowner is evicted could be shorter.

A nonjudicial foreclosure is usually better for the lender since they can quickly close the property.


A strict foreclosure is a type of foreclosure in which a lender takes direct possession of the property once the homeowner is evicted or leaves. Instead of selling the home at auction, the lender may take full ownership of the property for another sale or for some other use entirely. It’s always best to avoid a strict foreclosure if possible, so it’s important to know debt repayment strategies ahead of time.

If you’re interested in learning more about co-investment with Balance Homes, feel free to contact us today. Foreclosure can be a stressful time, but we may be able to help.


Chart: Judicial v. Nonjudicial Foreclosures |

Foreclosure Process/US Department of Housing and Urban Development |

Key Aspects of State Foreclosure Law: 50-State Chart |