The concept of a “foreclosure” as it is commonly understood in the United States – a bank seizing a property and selling it at a public auction for a fraction of its market value – is exceedingly rare in Israel. The Israeli legal and financial systems are structured in a way that provides a significant safety net for homeowners who are struggling to make their mortgage payments.
When a homeowner falls behind on their mortgage, the bank’s first step is not to foreclose, but to work with the borrower to find a solution. This can include a period of forbearance (a temporary pause in payments), a loan modification (changing the terms of the loan to make it more affordable), or a negotiated sale of the property.
If all of these efforts fail, the bank can initiate a legal process called “kinus nechasim,” which is a form of receivership. In this process, the court appoints a “kones nechasim” (a receiver), who is an attorney responsible for selling the property in a way that maximizes the return for both the bank and the homeowner.
The receiver’s goal is to sell the property for as close to its full market value as possible. The property is listed with real estate agents and marketed to the general public, just like any other property. While the sale may be more urgent, it is not a fire sale.
So, while it is technically possible for a bank to force the sale of a property in Israel, the system is designed to be a last resort and to protect the homeowner’s equity as much as possible. The dream of snapping up a foreclosed property for pennies on the dollar is, for the most part, a myth in the Israeli real estate market.
Too Long; Didn’t Read
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American-style foreclosures are extremely rare in Israel.
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The Israeli system prioritizes working with homeowners to avoid defaulting on their mortgages.
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If a sale is forced, it is through a court-appointed receiver who aims to sell the property at full market value.
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The idea of buying deeply discounted foreclosed homes is not a realistic strategy in Israel.
