foreclosure

In law, the transfer of title of a mortgaged property from the mortgagor (borrower, usually a home owner) to the mortgagee (loaner, for example a bank) if the mortgagor is in breach of the mortgage agreement, usually by failing to make a number of payments on the mortgage (loan).

The mortgagor may keep or sell the mortgaged property, often by auction. If the selling price is less than the mortgage, the mortgagee is responsible to the mortgagor for the difference. If the selling price is more than the worth of the mortgage, the mortgagor must give the mortgagee the difference. If the mortgage calls for instalment payments, foreclosure may be warded off if the mortgagee pays all back payments and expenses incurred. Otherwise, foreclosure can be cancelled only by the payment of the mortgage in full.