EuroCalc

What is Foreclosure?

Foreclosure is the legal process by which a lender repossesses a mortgaged property after the borrower fails to keep up payments, sells it, and uses the proceeds to recover the outstanding loan balance.

Procedures vary: judicial foreclosure goes through the courts (slower, more borrower protections), non-judicial foreclosure follows a power-of-sale clause in the deed of trust (faster, common in the US South and West). Switzerland uses a federal debt-enforcement procedure (Betreibung) ending in a public auction.

Foreclosure devastates the borrower's credit (a 7-year mark on US reports), often results in deficiency judgments if sale proceeds fall short, and removes the borrower from the home. Loss mitigation tools — loan modification, forbearance, short sale, deed in lieu — try to avoid the worst outcome.

Example

A borrower three months in arrears receives a notice of default; if cure does not happen within the statutory period, the property is auctioned and the borrower is evicted.

Related terms

Frequently asked questions

How long does foreclosure take?+

From 4 months (non-judicial) to over a year (judicial), depending on jurisdiction and contestation.

Can I stop foreclosure?+

Yes — bring the loan current, negotiate a modification, sell the home before auction, or file bankruptcy to delay proceedings.

What is a short sale?+

Selling the home for less than the loan balance, with the lender's approval, to avoid foreclosure.