What does the term "foreclosure" refer to?

The term "foreclosure" specifically refers to a legal process whereby a lender takes possession of a property due to the borrower's failure to make mortgage payments. This process typically occurs after a series of missed payments and is initiated by the lender to recover the remaining balance of the loan. During foreclosure, the lender may sell the property at auction or through other means to recoup their losses.

This definition highlights the crucial aspect of foreclosure as being rooted in legal proceedings and the lender's right to reclaim the property, differentiating it from other real estate concepts such as auction sales or modification agreements. Foreclosure is a significant action that affects a homeowner's credit and can lead to a loss of ownership of the home.