Definition of 'Foreclosure'
A foreclosure is a legal process in which a lender takes ownership of a property after the borrower has failed to make payments on their mortgage. The lender can then sell the property at auction to recoup their losses.
Foreclosure can happen when a borrower misses a payment or two, but it usually takes several months or even years of missed payments before the lender will start the foreclosure process. The lender will first send the borrower a notice of default, which gives them a certain amount of time to bring their loan current. If the borrower does not make the payments, the lender will file a foreclosure lawsuit.
Once the lender has filed a foreclosure lawsuit, the borrower will have a chance to defend themselves in court. If the borrower loses the case, the judge will order the property to be sold at auction. The borrower will still owe the lender the difference between the sale price and the amount of the loan.
Foreclosure can have a devastating impact on borrowers. They may lose their home, their belongings, and their credit score. They may also have difficulty getting a loan in the future.
There are a few things that borrowers can do to avoid foreclosure. They should make sure that they are making their payments on time and in full. They should also keep their credit score in good standing. If they are struggling to make their payments, they should contact their lender as soon as possible to see if there are any options available to help them avoid foreclosure.
Foreclosure is a serious problem, but there are resources available to help borrowers. The government has a number of programs that can help borrowers who are at risk of foreclosure. There are also a number of non-profit organizations that can provide assistance.
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