What is a foreclosure?

A foreclosure is accurately described as a legal process whereby a lender takes possession of a property due to the owner's failure to make mortgage payments. This process typically occurs after the borrower defaults on the loan, meaning they are unable to meet contractual obligations regarding repayment.

In a foreclosure, the lender can reclaim the property to recover the unpaid debt. This may lead to the sale of the property at auction, allowing the lender to recoup some of their lost funds. The process is governed by state laws, which outline the specific steps and regulations involved.

Understanding the intricacies of foreclosure is crucial for real estate professionals, as it has significant implications for both borrowers and lenders, influencing the housing market and opportunities for potential buyers.