What type of foreclosure is characterized by a court-ordered transfer of mortgaged property to the lender?

The type of foreclosure that involves a court-ordered transfer of mortgaged property to the lender is known as strict foreclosure. In this process, the lender must go through the court system to obtain a ruling that allows them to take possession of the property due to the homeowner's default on the mortgage. This procedure typically occurs in states that have adopted strict foreclosure laws.

During strict foreclosure, the court determines whether the lender has the right to reclaim the property and can order the property transferred to the lender without having to sell it. This differs from other forms of foreclosure, where a public auction might take place to sell the property and recoup the loan amount.

The concept of strict foreclosure is less common than other types, as many jurisdictions favor more straightforward methods of foreclosure that involve the sale of the property to recover the outstanding debt. Understanding this distinction helps clarify the mechanisms through which lenders can reclaim properties in default situations.