Foreclosure
The legal process by which a lender takes ownership of a home after the borrower falls seriously behind on payments, then sells it to recover the debt.
What does foreclosure mean?
Foreclosure is the lender's remedy when a mortgage goes unpaid, typically after several missed payments. The process and timeline vary by state, but it ends with the lender taking and selling the property, and it severely damages the borrower's credit for years. If you are struggling, contacting the servicer early about forbearance, a loan modification or a short sale almost always beats letting it reach foreclosure.
Frequently asked
How many missed payments before foreclosure?
Lenders typically start the process after about three to four missed payments (90–120 days late), though the exact timeline varies by state. Contacting your servicer early about forbearance or a loan modification almost always beats letting it reach foreclosure.
How long does a foreclosure stay on your credit?
A foreclosure remains on your credit report for seven years and sharply lowers your score. Waiting periods to get a new mortgage afterward run from about two years to seven depending on the loan, so avoiding it is well worth the effort.
Put it to use
Related terms
All glossary terms