Foreclosure
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
Foreclosure occurs when a homeowner defaults on their mortgage loan, meaning they fail to make the required payments. The lender initiates the foreclosure process, which can vary depending on the state and the type of foreclosure (judicial or non-judicial). The ultimate goal is for the lender to sell the property, usually through an auction or trustee sale, to recoup the money owed on the mortgage. Any proceeds from the sale go towards paying off the outstanding debt, and any remaining funds may be returned to the borrower, although this is rare.
John loses his job and is unable to make his mortgage payments for three consecutive months. His lender initiates foreclosure proceedings. After proper legal notification and a waiting period, the property is sold at auction to the highest bidder, with the proceeds going to the bank to cover the outstanding loan balance.
Remember that foreclosure is the *lender's* remedy when a borrower defaults. Focus on the process and the different types of foreclosure (judicial vs. non-judicial). Also, the foreclosure process is designed to protect the lender's investment, since the property is collateral for the loan.
Related Terms
Practice Questions
At a trustee’s foreclosure sale, the buyer receives a deed.
Nevada deficiency judgments after non-judicial foreclosure:
Arizona foreclosure notice of sale must be recorded at least:
Pennsylvania allows deficiency judgments after foreclosure:
Nevada Foreclosure Mediation Program:
Ohio allows deficiency judgments after foreclosure:
Foreclosure in Nevada is typically:
Foreclosure in Montana is typically:
Foreclosure in Oklahoma is typically:
North Carolina's statutory right of redemption after foreclosure is:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.