Foreclosure is the legal process effected through the court system in which a mortgagee (lender—often a bank) terminates a mortgagor’s (borrower’s) interest in the real property in which the mortgagor gave the mortgagee a security interest (a lien) as collateral for the loan used to purchase the property.

Foreclosure generally occurs when a homeowner defaults and fails to make mortgage payments as required by the loan agreement (promissory note).

Foreclosure allows the lender to seize the property, remove the homeowner, and sell the home—all of which are legal remedies the mortgagor and mortgagee agreed to in the mortgage contract.

In Alaska, foreclosure is a legal process that allows a lender to terminate a borrower's interest in a property due to the borrower's failure to make the required mortgage payments as stipulated in the loan agreement. Alaska permits both judicial and non-judicial foreclosures. In a judicial foreclosure, the lender must file a lawsuit and obtain a court order to foreclose on the property. This process involves the court system and can take a significant amount of time. Non-judicial foreclosure, on the other hand, does not require court intervention if the mortgage contains a power of sale clause. This clause allows the lender to sell the property without court oversight after providing the borrower with the required notice of default and intent to sell. Regardless of the method, the borrower is typically given an opportunity to pay off the default amount and stop the foreclosure process. If the foreclosure proceeds, the property is sold, often at a public auction, and the proceeds are used to pay off the mortgage debt. Any surplus may be returned to the borrower, but if the sale does not cover the debt, the lender may be able to seek a deficiency judgment against the borrower for the remaining amount, depending on the terms of the mortgage contract and state laws.