In the broadest sense, foreclosure occurs when a lending institution initiates a legal process to repossess property from a borrower. When a lending institution issues a mortgage, the value of the property is used as collateral for the loan. In the event that the borrower stops making payments on the mortgage for an extended period of time, the lending institution pursues a foreclosure. The purpose of the foreclosure is to seize the collateral property and eventually sell it on the open market to recover the remaining balance on the mortgage. Foreclosure is often associated with residential real estate, whereby a lending institution seeks to repossess a home from the owner. It can also be commercial in nature, whereby a lending institution seeks to repossess business ...

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