Foreclosure — When Borrowers Default

Foreclosure is the legal process by which a lender takes ownership of a property when the borrower defaults on the mortgage.

Judicial foreclosure:

Lender files lawsuit through the courts

Used in states that use mortgages (not deeds of trust)

Slower process — can take 1–3 years in some states

Non-judicial foreclosure (Trustee's Sale):

No court involvement; faster process

Used in states with deeds of trust (power of sale clause)

Can take 3–6 months

Redemption rights:

Equitable right of redemption — borrower can stop foreclosure at any point before sale by paying all arrears

Statutory right of redemption — some states allow borrower to buy back property after foreclosure sale within a set period

Deficiency judgment: If foreclosure sale doesn't cover full debt, lender may sue borrower for the difference (allowed in some states).

Short sale: Lender agrees to accept less than what is owed. Alternative to foreclosure. Requires lender approval.

Reference:

Wikipedia: Foreclosure

https://en.wikipedia.org/wiki/Foreclosure