Foreclosure is the legal process effected through the court system in which a mortgagee (lender—often a bank) terminates a mortgagor’s (borrower’s) interest in the real property in which the mortgagor gave the mortgagee a security interest (a lien) as collateral for the loan used to purchase the property.

Foreclosure generally occurs when a homeowner defaults and fails to make mortgage payments as required by the loan agreement (promissory note).

Foreclosure allows the lender to seize the property, remove the homeowner, and sell the home—all of which are legal remedies the mortgagor and mortgagee agreed to in the mortgage contract.

In Indiana, foreclosure is a judicial process, meaning that the lender must go through the courts to terminate a homeowner's interest in their property due to default on mortgage payments. When a homeowner fails to make payments as agreed in the promissory note, the lender can file a lawsuit to obtain a court order to foreclose on the property. This process begins with the lender sending a notice of default to the borrower, providing them with a chance to pay the overdue amount. If the borrower cannot cure the default, the lender may proceed with filing a complaint in court. The court will then typically issue a judgment of foreclosure, and the property will be sold at a sheriff's sale. The proceeds from the sale are used to pay off the mortgage debt, with any surplus returned to the borrower. If the sale does not cover the mortgage debt, the lender may obtain a deficiency judgment against the borrower for the remaining amount. Indiana law also provides certain protections for borrowers, including the right to be notified of the foreclosure action and the opportunity to contest it in court.