A foreclosure is when a mortgage lender assumes ownership of a property as a result of missed mortgage payments.
To begin, when a person buys a house and obtains a mortgage on the house, a promissory note must also be signed. Both of these are separate legal instruments. The Promissory Note details the homeowner’s promise to pay and the due dates for those payments. The Mortgage gives the property as collateral, thus securing the promissory note. It allows the property to be recouped if the agreement in the promissory note is breached.