Foreclosure

Foreclosure is a legal process in which a lender takes possession of a property after the borrower fails to make required payments on a mortgage or other loan secured by the property. This process typically involves the lender initiating legal proceedings to sell the property at auction to recover the outstanding debt.

Examples of foreclosure include:

• A homeowner unable to keep up with monthly mortgage payments due to job loss, leading the lender to file for foreclosure.
• A second mortgage lender initiating foreclosure on a property when the homeowner defaults on the loan, despite the first mortgage bEINg current.

Notable cases:

• Homeowners in the 2008 Financial Crisis: Many faced foreclosure due to subprime mortgages and plummeting home values, leading to widespread legal actions and evictions.
• Bank of America v. Caulkett (2015): The U.S. Supreme Court ruled that a second mortgage could not be stripped off in a Chapter 7 Bankruptcy if the first mortgage exceeded the property’s value, impacting many homeowners facing foreclosure.