In a foreclosure, who has the first claim to the proceeds from the sale?

In a foreclosure, the lender holding the mortgage has the first claim to the proceeds from the sale of the property. This is because the lender is the party that has a secured interest in the property, having provided the borrower with financing under the terms of the mortgage agreement. When a foreclosure occurs, the property is sold in order to satisfy the outstanding debt owed by the borrower to the lender. The proceeds from the sale are typically used first to pay off the mortgage loan, including any interest and fees.

If there are any funds remaining after the mortgage debt is settled, these may then be distributed to other parties in line with their claims. This priority in claims is rooted in the legal principle that secured creditors, like the lender in a mortgage agreement, have a right to be repaid before unsecured creditors or the borrower themselves. Thus, the correct answer reflects the established priority of claims in foreclosure situations, where the lender's financial interest is addressed first.