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 Kentucky, foreclosure is a judicial process, meaning that the lender must file a lawsuit in court to foreclose on a property. When a homeowner defaults on their mortgage payments, the lender may initiate foreclosure proceedings. The process begins with the lender filing a complaint in court and serving the borrower with a summons and complaint. The borrower is given an opportunity to respond and raise defenses. If the court finds in favor of the lender, it will issue a judgment of foreclosure and order the sale of the property at auction. 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. Kentucky law also provides a right of redemption, allowing the borrower to reclaim the foreclosed property by paying the full amount of the judgment, including costs and interest, within a certain period after the sale.