What is foreclosure?

Foreclosure refers specifically to the process by which a lender takes possession of a property when the borrower fails to meet the obligations of their loan agreement, typically due to missed mortgage payments. This legal process allows the lender to recover the amount owed on a defaulted loan by allowing them to sell the property that secures the loan. During foreclosure, the lender may initiate legal proceedings and ultimately obtain the legal right to sell the property to recoup their losses.

This definition underscores how foreclosure serves as a critical mechanism for lenders to protect their financial interests. While the other options pertain to real estate and property management, they do not accurately define foreclosure. For instance, selling a property at market price involves different processes that are not necessarily linked to the failure of a mortgage obligation. Transferring property ownership typically refers to processes like sales, gifts, or inheritance, which do not stem from default. Appraising a property’s value involves evaluating its worth and is unrelated to the foreclosure process.