What is the "foreclosure" process?

The foreclosure process is a legal procedure utilized by lenders to recover the balance of a loan from a borrower who has defaulted on their mortgage payments. This process involves the lender selling the property that was used as collateral for the loan in order to recoup the outstanding debt.

When a borrower fails to meet their mortgage obligations, lenders are given the right to initiate foreclosure proceedings, which can lead to the sale of the property at auction or through other means. Essentially, the legally defined process allows the lender to take ownership of the property, thereby enabling them to recover their investment, while also providing a structured way for borrowers to transition out of the default situation.

The other options do not accurately describe what foreclosure entails. Selling property without legal procedures cannot encompass the complexity of foreclosure, which is fundamentally rooted in legal systems. An agreement to avoid disputes is unrelated to foreclosure, which is itself a response to a dispute arising from the borrower's inability to meet loan obligations. Lastly, title insurance coverage pertains to protecting against losses related to defects in title, rather than the processes involved in recovering a debt through foreclosure.