Among the various types of foreclosure methods, one is most popular in the United States. Most of the states have legalized them putting in place required legislations in this regard. The system is the Deed-in-lieu of Foreclosure or strict foreclosure.  

In this method, the lending institutions, either the bank or any other financial organization who is the creditor, takes over the title and rights on the property mortgages to completely cover a debt. This is different from other foreclosures since there is no scope for loan modification here. You do not get the residual amount after clearance of the debt and processing fees. The entire property goes over to the creditor on “as is where is” basis.

Judicial sale is better than the strict foreclosure in the sense that the debtor gets back the differential of the market value and the debt amount. This essentially means that if the debt amount is less than the market value of the property foreclosed, the differential amount after clearance of the debt added with fees goes back to the debtor. In case of strict foreclosure through mortgage company contract this does not happen and may cause financial loss to the debtor. 

Moreover, in the judicial sales, the property goes to auction. Bids may be considerably higher than what was originally calculated as the value of the property put to auction. This could substantially benefit the debtor. Hence from most of the angles a strict foreclosure is a losing proposition for the debtor as he will not get such services.