Foreclosure by judicial sale, more commonly known as judicial foreclosure, which is required in the State of New York, involves the sale of the mortgaged property under the supervision of a court, with the proceeds going first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor/borrower if any proceeds are left. Under this system, the lender initiates foreclosure by filing a lawsuit against the borrower. As with all other legal actions, all parties must be notified of the foreclosure, but notification requirements must be strictly followed. A judicial decision is announced after the exchange of pleadings at a (usually short) hearing in a state court. In some rather rare instances, foreclosures are filed in federal courts.