Banking
Foreclosure — Collateral Property Taken Over
Taking possession of mortgaged property after a borrower defaults and legal proceedings complete.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Other Real Estate Owned (OREO) | Asset (+) | 120,000.00 | - |
| Allowance for ECL (Applied) | Contra-Asset (-) | 30,000.00 | - |
| Mortgage Loans (Foreclosed) | Asset (-) | - | 150,000.00 |
💡 Accountant's Note
When foreclosure is completed, the loan is extinguished and the property is recognized at fair value. Any remaining loan balance not covered by the property value (after applying the provision) is an additional loss.
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