What is the primary distinction between a foreclosure and a power of sale?

The primary distinction between a foreclosure and a power of sale lies in the treatment of the homeowner's equity and the outcome of the process. In foreclosure, the homeowner loses both the title to the property and any equity they might have had in it. This means that once the foreclosure process is complete, the homeowner has no claim to the property and cannot recover any value from it, even if the property sells for an amount greater than what is owed.

In contrast, when a property is sold through a power of sale, the homeowner may retain a claim to any surplus funds generated from the sale after the mortgage debt is settled. This process allows for a transaction where, ideally, if the property sells for more than the owed mortgage, the excess funds can revert to the homeowner. This aspect makes power of sale a less punitive option for homeowners than foreclosure, as it provides a potential avenue to reclaim some financial benefits after the sale of the property.

Thus, the distinction presented in the answer reflects the crucial differences in equity recovery and ownership status between the two processes, providing clarity on the effects each has on a homeowner facing financial difficulties related to their property.