What legal process allows a lender to take possession of a property after mortgage default?

The legal process that enables a lender to take possession of a property after a borrower defaults on their mortgage is known as foreclosure. This process involves the lender initiating legal proceedings to recover the balance of a loan from a borrower who has stopped making payments. In a foreclosure, the lender typically seeks to sell the property at auction or through a real estate listing to recover the owed amount.

Foreclosure is critical to the lending process as it provides a legal framework for lenders to reclaim their collateral (the property) when borrowers fail to meet their obligations under the mortgage agreement. It is a structured legal process, often governed by state laws, ensuring that lenders can enforce their rights while providing some protections to borrowers.

Short sales involve selling the property for less than the amount owed on the mortgage, typically to avoid foreclosure, but they do not legally transfer ownership to the lender. Eviction refers to the removal of tenants from a rental property, which is a different context entirely. Repossession generally refers to personal property rather than real estate, making it inapplicable in the context of mortgage default concerning real property.