Foreclosure

This is the legal process through which the lender takes ownership of the home, typically when the homeowner / borrower fails to make payments on the mortgage. The lender will then attempt to sell the home quickly in order to get the nonperforming loan off their books.

Because this is the most important term in our glossary, we'd like to provide some other definitions of foreclosure from around the Web:

"A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower." -Source: HUD.gov
"A process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files the necessary documents..." -Source: FrontDoor.com
"Procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payments or terms." -Source: EquityDirect.com
"the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner's failure to comply with an agreement between the lender and borrower..." -Source: Wikipedia.org

Learn more about the various terms associated with home foreclosure in our glossary.