What is a "foreclosure"?

A foreclosure is fundamentally defined as a legal process in which a lender takes possession of a property from a borrower who has failed to make the required mortgage payments. This process is initiated by the lender when the borrower defaults on their loan obligations, allowing the lender to reclaim the asset used as collateral for the loan to mitigate their financial loss.

Through foreclosure, the lender can either sell the property to recover the outstanding debt or hold onto it to potentially lease or sell it later. The process typically includes several steps, such as notifying the borrower of the default, and can ultimately lead to the property being sold at auction if the borrower does not rectify the default situation.

The other provided choices do not accurately capture the essence of foreclosure—halting the sale of a property, auctioning methods, and types of investments are separate concepts related to real estate but diverge from the direct implications of foreclosure as a lender reclaiming property due to nonpayment.