What exactly is foreclosure?

Question

What exactly is foreclosure?

Answer 1

The legal process a lien holder uses to take your property should you default or fail to pay money that is owed.

*just so you know there are different types of foreclosures - one for example is tax lien, should you not pay your property taxes. That being said, a mortgage company is not the only one that can take your property. Hence, the term lien holder.

Answer 2

From your question I'm guessing you're looking for a basic explanation...so I'm going to try to avoid terms like 'lienholder'.    

When you get a mortgage (loan) to buy a house, you make an agreement with the lender (the bank) that you're going to pay them back over a period of time.   The bank owns part of the house until you finish paying the loan - so if you sell it, the bank gets their money back before you get yours.

If you stop making the payments before the loan is repaid, the bank can demand you pay them back everything you owe all at once.  If you can't pay them, the bank can take the house (foreclosure) and sell it to someone else to get the bank's money back.

Very, very simply - you promised to pay the bank back if they bought the house for you. If you don't pay them, you have to give the house back.

Answer 3

If you don't pay your mortgage the bank will kick you out and take your house!  Its just like a repo on the car!

~Kat~

Answer 4

Foreclosure is a process by which a lender regains a property which they have financed. Typically, this is because the borrower or homeowner is behind on house payments and is unable to catch up, often due to circumstances outside of his or her control. When the lender forecloses on the homeowner, the homeowner must move out of the house, therefore, losing all possession of the property and jeopardizing any possible equity that the homeowner may have in the home. There is a legal time frame, which varies from state to state, which determines how long the foreclosure process can take.