Foreclosure (ejecución hipotecaria)
The court procedure through which a lender recovers an unpaid mortgage by taking the property to public auction.
Detailed explanation
Once at least twelve instalments are unpaid — or 3% of the principal during the first half of the loan's life — the lender can call in the whole debt and ask the court to enforce the security. The procedure ends with the property at public auction: if nobody bids, the lender can take it over and the asset becomes a REO. This is the route that turns an NPL into a building.
Practical example
A €120,000 mortgage with 18 unpaid instalments reaches auction with an appraisal value of €200,000. If the auction fails, the lender takes the flat at the statutory percentage of that appraisal and lists it as a REO.
When it matters
If you buy debt rather than bricks, the foreclosure is your timeline and your risk: the discount you get is the price of that court journey.
At Arkos Investor
We audit how far along each procedure is before publishing the asset, so you know whether you are buying a case that is starting or one that is about to end.
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