A foreclosure occurs when a bank repossesses a house, usually when the person who bought the house has not made mortgage loan payments over several months. The home owner must vacate the home and the bank sells it in a foreclosure. A foreclosure looks bad on a credit report and will make it more difficult for the person who lost the home to buy another one. Foreclosure is the legal action taken to extinguish a home owner’s right and interest in a property, so that the property can be sold in a foreclosure sale to satisfy a debt.
Keeping Yourself Out Of Foreclosure
If you fall behind on your mortgage or are facing foreclosure, the first step is not to panic and get on the phone with your lender. Lenders don't want to see borrowers foreclose on their homes, and often can work with the borrower to get on a payment plan that will get you back on track. Another option to avoid foreclosure is to sell your home, even if it's a short sale.