In mortgage foreclosure, how is the property typically sold and where do the proceeds go?

• A. Sheriff sale
• B. Deed in lieu
• C. Short sale
• D. Judicial sale

Answer: (A)

Foreclosure sales are typically conducted as a sheriff's sale, a public auction organized by the sheriff as part of the court-ordered process. The property is advertised in advance and sold to the highest bidder, with title often transferring after the sale and sometimes after court confirmation depending on the jurisdiction.

Proceeds from the sale are used to satisfy the lender’s claim and the costs of the sale. First, the costs of the sale and any fees are paid, then the remaining funds go toward the mortgage debt. If there are multiple liens, they are paid in order of priority, so the mortgage lien is addressed before less senior liens. Any surplus after the mortgage and other senior liens are paid goes to the borrower. If the sale doesn’t cover the full debt, a deficiency may remain depending on state law.