What is the process of "foreclosure"?

The process of "foreclosure" refers to a legal procedure whereby a lender seeks to recover the balance owed on a defaulted loan by taking possession of the mortgaged property. This typically occurs when a property owner fails to make the required mortgage payments over a period of time, thereby violating the terms of the mortgage contract. As a result, the lender has the legal right to initiate foreclosure proceedings to enforce their security interest in the property.

When foreclosure is initiated, the lender will usually follow a specific legal process that may involve a court review or an auction of the property. This process allows the lender to recoup some or all of the money owed, often by selling the property at a public auction. Once the property is sold, the proceeds are used to settle the debt on the loan, although there are instances where the sale may not cover the total amount owed.

Understanding the foreclosure process is crucial for real estate professionals as it involves various legal and financial implications for both lenders and borrowers, shaping the landscape of property ownership and the broader real estate market.