Repossess
Definition and meaning of Repossess in real estate.
To repossess is the act of a creditor reclaiming ownership and physical possession of a property after a borrower defaults on a secured loan agreement. In real estate, this process is legally known as foreclosure.
In more detail
When a buyer signs a mortgage, they pledge the property as collateral for the loan. If the buyer fails to make payments or violates other loan terms, the lender has the legal right to seize the property to recover the unpaid debt. The repossession process must follow strict legal procedures, which vary by state and depend on whether the state uses judicial or non-judicial foreclosure.
Once the property is repossessed, the lender typically sells it at a public auction or lists it on the open market as real estate owned. For borrowers, repossession results in the loss of their home and severe, long-term damage to their credit scores.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Trigger event | Borrower default |
| Legal process | Foreclosure |
| Consequence | Loss of property and credit damage |
After a borrower stopped making mortgage payments for several months, the lender filed a foreclosure lawsuit to repossess the home and sell it to recover the outstanding loan balance.
Frequently asked questions
Is repossession the same as foreclosure in real estate?
Yes, foreclosure is the formal legal process by which a mortgage lender repossesses a residential or commercial property.
Can you stop a lender from repossessing your home?
Borrowers can often stop repossession by paying the past-due amount, negotiating a loan modification, or filing for bankruptcy before the foreclosure sale.
Related terms
Sources & references
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