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Real estate financeSubject 5 of 19

Foreclosure

The legal process used to enforce a mortgage lien after default and subject the property to sale or another court-ordered remedy.

Direct answer

What does Foreclosure mean?

The legal process used to enforce a mortgage lien after default and subject the property to sale or another court-ordered remedy.

Exam cue: New York uses judicial foreclosure, so recognize the court process and the borrower's equity of redemption before the sale.

What does it look like in a question?

New York example

After uncured default and required steps, the lender begins a foreclosure action in court.

Common exam trap

What should you not confuse it with?

Foreclosure is not the same as an immediate private repossession of the home.

Related real estate finance terms

AmortizationRepayment of debt through scheduled payments that reduce principal over time.Balloon paymentA final payment that is substantially larger than the preceding scheduled payments.Debt serviceThe scheduled principal and interest payments required on debt for a stated period.EquityThe owner's value in property after subtracting liens from the property's value for the calculation being used.Loan-to-value ratioThe loan amount expressed as a percentage of the applicable property value or price.MortgageA security instrument that creates a lien on real property to secure repayment of a debt.
Sources used2 references with section locators

The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.

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