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Foreclosure
In legal terminology a foreclosure is a legal proceeding initiated by a lender to seek compensation from a creditor who has failed to make the necessary payments to meet the agreed upon terms of a financial obligation such as a mortgage on a property.
Typically the property is repossessed and disposed of via one of two venues. In an action called "deed in lieu of foreclosure" the title and property are transferred to the ownership of the bank or other financial institution that financed the loan. In a "simple foreclosure" an officer of the court, usually the county sheriff, seizes the property and puts it up for auction. If no buyer secures the property, the title then goes to the lending agency.
In terms of an individual's overall credit record, a foreclosure would be classified as a serious financial event on par with a bankruptcy and will have a serious negative impact on that person's credit rating.
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