Foreclosure is a legal process that involves an individual’s loss of property due to the individual’s lack of payments. If a borrower fails to make payments on a loan, the lender can call for the sale or liquidation of an asset used as collateral for the loan, in an attempt to recover the balance of the loan.
The foreclosure process generally follows a timeline that begins with the initial missed payments, moves to a scheduled sale, and finally enters a redemption period in which the individual can reclaim the property by paying the outstanding mortgage balance and all costs incurred during the foreclosure process. Other options such as refinancing, a short sale, or even bankruptcy may present homeowners with ways to avoid foreclosure. The impact of foreclosure goes beyond the homeowners: It also expands to neighborhoods and towns as a whole. Cities with high foreclosure rates often experience more crime and thefts with abandoned houses being broken into. Foreclosures also impact neighboring housing sales.