Lien Theory and Title Theory
The courts of each state in the United States have different theories on property ownership and how title to real estate is held. Foreclosure under lien theory is usually more complicated and time consuming than foreclosure under title theory.
Under lien theory, when a buyer purchases a home, the buyer obtains real estate title to the home from the seller, the lender places a lien on the property to secure their loan. If foreclosure becomes necessary, the lender will generally foreclose their mortgage through the courts (judicially).
Under title theory, when a buyer purchases a home, the buyer obtains real estate title to the home from the seller, but then delivers legal title to the lender under a Deed of Trust. The buyer/borrower retains equitable title and rights of possession, but if foreclosure becomes necessary, the lender generally seeks possession of the property through power of sale (non-judicially).
It should be noted that some states allow the use of both mortgages and deeds of trust, states also can allow either judicial or non-judicial foreclosure for either a mortgage or deed of trust.
