What does foreclosure mean in real estate?

Foreclosure specifically refers to the legal process initiated by a lender when a borrower fails to make the required mortgage payments. This process allows the lender to take control of the property as a means of recouping the unpaid loans. Once foreclosure is initiated, the lender may ultimately sell the property, typically at an auction, to recover the outstanding debt. Understanding foreclosure is vital in real estate as it highlights the responsibilities of borrowers and the rights of lenders.

The other definitions provided do not capture the essence of foreclosure. Selling a property at auction is a result of the foreclosure process but does not encompass the entire legal procedure involved. The transfer of property ownership to a new buyer typically refers to standard real estate transactions, which is distinctly different from the circumstances surrounding foreclosure. Lastly, the process of assessing property taxes is unrelated to foreclosure, as it pertains to the valuation of property for taxation purposes, rather than the debt recovery process of lenders. This clarity around the definition of foreclosure is crucial for comprehending the implications it has for both borrowers and lenders in the real estate market.