What does the term "foreclosure" refer to in real estate?

The term "foreclosure" refers specifically to the legal process by which a lender takes control of a property when the borrower fails to make mortgage payments. This process is initiated after a series of missed loan repayments, allowing the lender to reclaim the property to recover the outstanding debt. Foreclosure typically leads to the sale of the property, often at a public auction, where the property can be sold to the highest bidder, but the core concept is the action taken by the lender due to the borrower's default on the loan.

In the context of real estate, understanding foreclosure is essential for navigating situations where homeowners face financial difficulties, as it outlines the rights of lenders and the consequences for borrowers.