What Is Foreclosure?

Usually, 90 days after you initially fail to fulfill your mortgage's monthly payment requirement, your lender is able to formally begin the foreclosure process. From a legal standpoint, foreclosure is the process through which a lender acts to take control of the property used to secure the mortgage loan. Through foreclosure, the lender will evict the homeowner and sell the property to a third person to recover the money that was loaned to the borrower and lost after the borrower failed to comply with the duty to pay the mortgage.

Put simply, foreclosure is the penalty you agreed to as a borrower if you breach your mortgage contract. You agreed to give up your property to the lender in the event you fail to make your required payments or otherwise breach your obligations under a mortgage. Since you pledged the property as collateral in case of a breach, the lender is allowed to sell the property in order to recover the debt you owe.