What typically happens if a borrower defaults on a mortgage?

When a borrower defaults on a mortgage, it typically leads to the property going into foreclosure. Defaulting means that the borrower has failed to meet the repayment terms of the loan, which usually involves missing multiple payments. In such cases, the lender has the legal right to initiate foreclosure proceedings, allowing them to take possession of the property to recover their financial loss.

Foreclosure is a legal process whereby the lender can sell the property to recoup the outstanding debt. This process can vary by jurisdiction but generally entails a series of notices and legal actions that culminate in the sale of the property at auction. After foreclosure, the borrower often loses their rights to the property and may face additional consequences, such as a lower credit score and difficulty obtaining future loans.

Understanding this process emphasizes the importance of mortgage payments and the serious repercussions that a default can have for the borrower, both financially and personally.