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 Pennsylvania, 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 sending a notice of intent to foreclose to the borrower, providing them with a period to cure the default. If the borrower fails to make the necessary payments, the lender can then file a complaint in court. The borrower is served with the complaint and has an opportunity to respond. If the court rules in favor of the lender, a foreclosure sale is scheduled. At the sale, the property is auctioned to the highest bidder. 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 debt, the lender may obtain a deficiency judgment against the borrower for the remaining amount. Throughout the process, borrowers in Pennsylvania may have options to avoid foreclosure, such as loan modification, short sale, or deed in lieu of foreclosure, and are advised to consult with an attorney to explore their legal options.