Foreclosure

Real Estate

Foreclosure is the legal process by which a lender takes possession of a property after the borrower defaults on the mortgage. Stages: missed payments → Notice of Default → Notice of Trustee Sale → auction → if no sale, bank-owned (REO). Foreclosure timelines vary by state (90 days in non-judicial states like California to 2+ years in judicial states like New York). Devastates credit (200+ point drop) and remains on credit reports 7 years. Alternatives: loan modification (reduce rate or extend term), forbearance (pause payments temporarily), short sale (sell for less than owed, bank approves shortfall), deed-in-lieu (give bank the property). Foreclosure properties can be opportunity for investors.