A borrower is unable to make payments on their mortgage. What process may take place?

When a borrower is unable to make payments on their mortgage, foreclosure is the legal process that may take place. Foreclosure allows the lender to recover the remaining balance on the loan from the borrower who has stopped making payments, effectively allowing the lender to take possession of the property.

In foreclosure, the lender typically initiates a court process, and if successful, the property is sold, often at a public auction, to recover the owed amounts. This process results in the borrower losing their home, and it can have significant long-term consequences for their credit score and financial future.

While other options like negotiation, loan modification, and short sale may also be relevant in situations where a borrower is facing financial difficulties, they do not result in the seizure of the property. Negotiation and loan modification might help the borrower restructure their payments or create a more manageable repayment plan, while a short sale involves selling the property for less than the amount owed on the mortgage with the lender's approval. However, when payments cannot be made, foreclosure is a direct intervention by the lender to regain control of the asset.