What is a foreclosure?

A foreclosure is primarily a legal process initiated when a borrower fails to make necessary mortgage payments. This process allows lenders to reclaim the property to recover the unpaid loan balance. During foreclosure, the lender seeks to enforce their right to take possession of the property due to the borrower's default.

Typically, once the lender has taken possession, they may proceed to sell the property, often through a public auction, to recoup their losses. This distinction highlights that while the sale at auction may occur as part of the foreclosure process, the essence of foreclosure itself lies in the legal proceedings stemming from a borrower’s failure to meet their financial obligations under the mortgage agreement. Hence, the choice referring to foreclosure as a legal process for unpaid mortgage loans captures its core nature accurately.