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 North Carolina, foreclosure is a legal process that allows a lender to terminate a borrower's interest in a property due to the borrower's failure to make the required mortgage payments as stipulated in the loan agreement. The process is conducted through the court system and is initiated when the lender files a lawsuit against the borrower. North Carolina primarily uses a non-judicial foreclosure process, which means that the foreclosure can proceed without court intervention if the mortgage agreement includes a power of sale clause. However, the lender must adhere to specific procedural requirements, such as providing notice to the borrower and allowing a period for the borrower to respond or cure the default. If the foreclosure proceeds, the property can be sold at a public auction. The proceeds from the sale are used to pay off the mortgage debt, and any surplus may be returned to the borrower. If the sale does not cover the full amount of the debt, the lender may seek a deficiency judgment against the borrower for the remaining balance. It is important for homeowners facing foreclosure in North Carolina to seek advice from an attorney to understand their rights and options.