Foreclosure

Foreclosure is the legal proceeding in which bank or other secured creditor sells or reclaims a part of real property due to the owner's failure to comply with the agreement between the lender and borrower called a "mortgage" or "deed of trust". Usually, the abuse of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the transaction is complete, it is normally said that the lender has foreclosed its mortgage or lien.

In US, there are two kinds of foreclosure in common law states. Using a deed in lieu of foreclosure, the bank claims the title and possession of the property back in full satisfaction of a debt, usually on contract. Many states needs the latter sort of proceeding in some or all cases of foreclosure, in order to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is significantly less than the market value of the immovable assets.