The legal process by which a lender seizes and sells mortgaged property when the borrower fails to make required payments, used to recover the outstanding loan balance.
From Old French 'forclos' meaning 'excluded' or 'shut out,' literally 'outside the enclosure.' The term evolved from medieval property law where defaulting borrowers were 'foreclosed' from reclaiming their property rights.
Foreclosure is the mortgage world's nuclear option—it can wipe out a family's life savings in legal fees and credit damage, but it also creates opportunities for investors to buy properties at steep discounts! The process varies dramatically by state, from 30 days to over a year.
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