foreclosure
for-KLOH-zher
/fɔːrˈkloʊ.ʒər/
The legal procedure by which a mortgage lender takes possession of a property when the owner fails to keep up mortgage payments.
Describes the entire judicial or legal recovery process that terminates the owner's equity rights due to loan default.
The story behind the word. From Old French 'for-' (outside) and 'clore' (to close). In medieval Anglo-Norman courts, to 'forclose' meant to shut someone out from the courtroom. In mortgage finance, it evolved into shutting out defaulting borrowers from redeeming their land.
Word relationships
- repossession: Repossession usually refers to taking back vehicles or personal property, while foreclosure specifically applies to real estate mortgages.
- distraint: Distraint is the legal seizure of property to enforce debt payment without necessarily transferring home ownership.
- redemption: Redemption is paying off debt to retain full home ownership, while foreclosure terminates ownership.
Commonly confused with
- short sale: A short sale occurs when a homeowner sells property for less than owed with lender approval, while foreclosure is legal bank seizure.
Word family
- foreclose (verb): To deprive a borrower of property rights due to payment default.
Collocations
- foreclosure rate
- foreclosure proceedings
- avoid foreclosure
- foreclosure sale
- bank foreclosure
Example sentences
- "Preventing foreclosure requires early intervention between mortgage servicers and homeowners experiencing temporary financial hardship." Public Policy
- "During the financial downturn, thousands of homes went into foreclosure after subprime mortgage rates spiked." Housing Market Crisis
Memory hook
The bank CLOSES the door FOR good on a defaulting homeowner. Closing out property rights after default.
When not to use
Do not use to describe voluntary sales or normal home upgrades.
Fun facts
- During the 2008 U.S. housing crisis, over 3 million homes entered foreclosure in a single year.
Related words
Explore more words
bankruptcy, collateral, default, insolvency, debtor, moratorium
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