What may happen if a borrower fails to make their mortgage payments?

If a borrower fails to make their mortgage payments, the lender has the right to initiate foreclosure proceedings. Foreclosure is a legal process through which the lender can take possession of the property securing the loan if the borrower defaults on their payment obligations. This step helps the lender recover their investment by selling the property, as the borrower has not fulfilled their financial commitment.

While options like negotiating a lower payment schedule might happen in some cases, it is not guaranteed and is often dependent on the lender’s policies and the borrower's financial situation. Additionally, receiving a tax credit is unlikely as mortgage payment defaults typically do not lead to any tax benefits for the borrower. Lastly, the notion that the loan will automatically be forgiven is inaccurate; debts generally do not disappear without a legal process or agreement, and foreclosure is one of the primary tools lenders use in cases of non-payment.