A foreclosure is essentially a legally-forced change in possession, where a lender seizes collateralized property – such as a home – when a borrower is unable to pay the loan. While laws vary by state, borrowers typically have a ‘period of redemption’ to pay loan, interest and foreclosure costs to avoid losing the property. After this period, the lender can exercise their right to take over ownership of the property that was used as loan collateral, and sell it to recover their loan. The borrower is still responsible for any balance due if the sale price is less than the loan. Foreclosure is complex and costly, and nearly always involves legal proceedings.
