Final answer:
In lien theory states, the type of foreclosure provided is judicial foreclosure. This involves the court system and requires a lawsuit to enforce the lien. It differs from non-judicial foreclosures in title theory states and from deficiency judgments.
Step-by-step explanation:
In lien theory states, the type of foreclosure provided is judicial foreclosure. In these states, the mortgage does not convey an ownership interest in the property to the lender. Instead, a lien or security interest in the property is granted to secure the loan.
If the borrower defaults, the lender must go through the court system to enforce its lien. The process involves filing a lawsuit to obtain a court order to foreclose, selling the property at an auction, and applying the proceeds to the loan. In contrast, title theory states allow for non-judicial foreclosure, where the lender can foreclose without court involvement under a power of sale clause.
This is distinct from a deficiency judgment, which is a separate legal action that may follow a foreclosure if the auction proceeds are insufficient to cover the outstanding mortgage debt.