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Not all states allow for a strict foreclosure. In fact, according to HUD, only a small number of states allow for it. In strict foreclosure proceedings, the lender files a lawsuit against a homeowner that has defaulted on their mortgage. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder, rather than being sold at auction like in other type of foreclosure proceedings. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.