Foreclosure
A legal term referring to the failure of a mortgagee to pay the
amounts specified in the terms of the mortgage contract. In foreclosure, legal
proceedings often determine that the lender on the property gains control of it,
barring a 'foreclosure sale'.
When a homeowner defaults by failing to make payments on his or her mortgage, the
bank or financial institution that holds the mortgage note may foreclose on the property.
Foreclosure gives the legal ownership of a property to the bank to allow the bank to recoup
its investment. Foreclosure proceedings vary by
state but usually involve court appearances to ensure the foreclosure is warranted.
Example:
The average foreclosed home sells for 43% less than other homes, according to RealtyTrac.
