What role does a lender play in a foreclosure?

A lender plays a critical role in a foreclosure primarily through the process of taking control of a property when a borrower fails to make their mortgage payments. When a borrower defaults, the lender's interest is to recover the outstanding debt they are owed. This typically involves initiating foreclosure proceedings, which legally allow the lender to reclaim the property.

In this process, the lender may sell the property at auction to recoup some of the losses incurred due to non-payment. This not only helps the lender recover funds but also resets the ownership of the property, paving the way for it to be sold to a new buyer who can keep up with payments. This function of the lender effectively manages the risk associated with mortgage lending, ensuring that they can mitigate losses as well as maintain the stability of the financial system in real estate.