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Foreclosure
A lender initiates a legal proceeding called a "foreclosure" when a debtor has failed to make the needed payments to honor the terms of a loan agreement, most especially the financial obligation of a home mortgage.
In a foreclosure the property will be disposed of in one of two ways. If the action is a "deed in lieu of foreclosure" the lender, usually a bank, simply takes possession of the property and its title and disposes of it in such as way as to recoup the loss suffered on the original loan. If the action is a "simple foreclosure" the county sheriff seizes the property and puts it up for auction. If the property does no sell, the title passes to the bank or other lending agency.
A foreclosure is a major negative event on an individual's credit record carrying a financial impact roughly equal to that of a bankruptcy.
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