Agencies that can safely foreclose security instruments nonjudicially under appropriate federal or state law, or pursuant to a power of sale in a deed of trust, should do so without referring such matters to the Department of Justice or the United States Attorneys for handling.

The Department of Housing and Urban Development (HUD) may also foreclose nonjudicially pursuant to the Multi-Family Foreclosure Act of 1981. See 12 U.S.C. § 3701 et seq.

If judicial foreclosure is required, suit should be brought in the name of the United States and filed in the United States district court, unless, for exceptional reasons, the Civil Division has authorized utilization of the state courts. An officer or agency of the United States should not be joined as a defendant. Rather, the respective claims and liens of the federal agencies affected should be set forth as claims of the United States. If difficulty is encountered in obtaining the prompt agreement of another agency to have its lien foreclosed in the same proceeding as that requested by the referring agency, contact the Commercial Litigation Branch’s Corporate/Financial Litigation Section.

Judicial foreclosure should be given priority attention. Client agencies face a substantial dollar loss for each month of delay in completing foreclosure through the delivery of the Marshal's deed. Suit should be filed immediately, without making further demand on the mortgagor, unless additional notice is otherwise required under the mortgage or applicable statute or regulation. If the agency desires an order placing it in possession of the mortgaged property as "mortgagee in possession," or the appointment of a receiver, prompt action should be taken. Motions for summary judgment should be utilized when appropriate to expedite the entry of foreclosure decrees. In HUD multi-family foreclosures no compromise should be entered into with the mortgagor prior to liquidation of the security property without the express approval of the Civil Division, and internal guidance should be consulted.

[updated April 2018]