The term "statutory foreclosure" (as hinted at by the alternate term, "non-judicial foreclosure"), refers to any foreclosure proceeding that is not conducted under the supervision of the court.
The process is similar to a judicial foreclosure. When the borrower defaults on the loan, the lender issues a Notice Of Default (NOD). Failure to address the default gives the lender the right to sell the property in order to recover their funds. The sale, usually by public auction, is conducted by the lender or a trustee rather than by an officer of the court.
A statutory foreclosure can occur when the mortgage contract stipulates that in the event of default, the lender has the power to sell the property to recover their funds. This is known as a "power of sale" clause. The foreclosure proceedings are then conducted according to the contract, without the need to bring an action before the court.
To protect the rights of the borrower, each state has strict regulations as to the proper notices and opportunities to repair the default before sale of the property can go ahead. As with a judicial foreclosure, fees, legals, commissions etc are paid for out of the proceeds of the sale. The remaining money is then applied against the debt, and any balance at the end is handed over to the borrower.
Because it does not involve court cases, statutory foreclosure is generally a relatively fast procedure. Costs can often be lower than a judicial foreclosure as well, since court costs and legals are avoided, thereby potentially leaving more equity for the borrower once the debt is repayed.
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