A legal process where a lender takes possession of a home after the borrower defaults.
Foreclosure is a legal process lenders initiate when homeowners stop making mortgage payments. After typically 120–150 days of missed payments, the lender files for foreclosure, eventually taking possession of the property and selling it to recover the loan balance. Foreclosure is devastating: it destroys credit scores (dropping 100+ points), stays on your credit report for 7 years, and makes it difficult to borrow in the future. If the home sells for less than the loan balance, the borrower may still owe the difference (called a deficiency), depending on state laws. Facing foreclosure, contact your lender immediately to discuss options like loan modification, forbearance, or short sale. Many nonprofits offer free foreclosure counseling to help navigate options.