What can be a consequence of a foreclosure for the borrower?

When a foreclosure occurs, one of the primary consequences for the borrower is the loss of ownership of the property, which means they will no longer have any claim to the home. This situation typically arises when the borrower fails to meet the mortgage payments, leading the lender to reclaim the property as a way to recover losses.

In addition to losing ownership, foreclosure significantly impacts the borrower's credit score. A foreclosure can remain on a credit report for up to seven years, which can hinder the borrower's ability to obtain future loans or mortgages. This damage to creditworthiness results in higher interest rates and reduced chances of securing credit in the future.

The other choices do not accurately reflect the realities of foreclosure. Financial settlements are typically not part of the foreclosure process; living in the property indefinitely is not an option since the borrower loses legal rights to the property; and a new mortgage with better terms is unlikely, as the foreclosure severely negatively impacts the borrower's financial profile.