The title is held in the lender's name according to title theory or mortgage states until the last payment is made, at which point the title is transferred back to the borrower.
According to the principle of liens, the borrower retains title to the property, but the lender has been granted a security interest or lien on it. Normally, the lien would be paid off and freed if the property was sold. The title corporation handles that procedure.
There are disparities in how foreclosures are handled, in addition to how title to the property is held. Foreclosures are legal private pricey lawsuits and may take months or years or years to complete in areas where the lender holds title to the property. According to Lien Theory, a trustee manages the non-judicial foreclosure process.
The blue states follow the title theory, whereas the red states follow the lien theory.
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