DEFINITION of 'Right Of Foreclosure'

A lender's ability to take possession of the property used to secure the loan it provided if the borrower stops making payments. Homeowners associations also have a right of foreclosure, which they can exercise if a homeowner fails to pay homeowners association fees and/or special assessments.


BREAKING DOWN 'Right Of Foreclosure'

For example, if John buys a house by obtaining an adjustable-rate mortgage from the bank and then he stops making his mortgage payments because his adjustable-rate mortgage resets and the monthly payments are too high, the bank will exercise its right of foreclosure. The bank then becomes the new legal owner of the property, and will sell the house to recoup its losses.

RELATED TERMS
  1. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  2. Foreclosure Buyout

    A refinancing program that allows a homeowner to avoid foreclosure ...
  3. Foreclosure Action

    The legal proceedings initiated by a lender in the case of mortgage ...
  4. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  5. Foreclosure Filing

    The initial legal process of selling a mortgaged property that ...
  6. Zombie Title

    A right to ownership and possession of a home that remains with ...
Related Articles
  1. Personal Finance

    Avoid Foreclosure: How To Handle An Underwater Mortgage

    Foreclosure is the biggest fear of any struggling homeowner. These tips just might save your credit rating.
  2. Investing

    What Homeowners Need To Know About Zombie Titles

    Understanding how the foreclosure process normally works - and how it dysfunctions in today’s market - will help you avoid becoming a victim.
  3. Investing

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  4. Investing

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  5. Investing

    Don't Get Trapped in a Zombie Foreclosure

    Understand how foreclosures work and you can avoid the disastrous consequences of having a zombie foreclosure.
  6. Investing

    Can You Dispute A Foreclosure?

    The bank has foreclosed on your mortgage, but do you really have to leave? Learn how to fend off the lenders and gain the time you need to save your home.
  7. Investing

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  8. Personal Finance

    Your Mortgage: When It's Time to Walk Away

    Mathematically speaking, walking away can sometimes be the most prudent choice. Find out how to run the numbers.
  9. Investing

    Buying Foreclosures At A Bargain Price

    Learn how to buy a foreclosed home at a discount.
  10. Investing

    What Is A Short-Sale Property & How Does It Work?

    A short sale is an alternative to foreclosure whereby indebted owners get permission from a bank to sell their house for less than amount of the mortgage.
RELATED FAQS
  1. Is it a good idea to add a reverse mortgage to your retirement strategy?

    A reverse mortgage can be a great way to increase retirement income. Does it work for everyone? What happens after a homeowner ... Read Answer >>
  2. How Many Mortgage Payments Can I miss Before Foreclosure?

    The status of your lender and the condition of your local housing market are some of the factors that determine how many ... Read Answer >>
  3. Is homeowners' insurance required by law?

    Learn why it is always wise to protect your home with insurance even if it is not required. Understand how high-deductible ... Read Answer >>
  4. What is Foreclosure Investing?

    Foreclosure investing, despite the promises of late-night television infomercials, is not for the inexperienced. Read Answer >>
  5. My mortgage payments are no longer affordable; is there anything that I can do to ...

    The most important thing for you to remember if you find that you may not be able to make this month's mortgage payment is ... Read Answer >>
Hot Definitions
  1. Hedge Fund

    An aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions with the goal ...
  2. Financial Statements

    Records that outline the financial activities of a business, an individual or any other entity. Financial statements are ...
  3. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  4. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  5. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  6. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
Trading Center