What is a foreclosure?

A foreclosure is specifically a legal process initiated by a lender when a borrower fails to meet the repayment terms of a mortgage. In this context, if a property owner defaults on their mortgage payments, the lender has the right to repossess the property to recover the outstanding debt. This process typically involves several legal steps, including notifying the borrower of the default, allowing time for them to cure the default, and, if necessary, proceeding with the sale of the property at auction to settle the outstanding amount owed.

The other options describe different real estate activities that are not related to the concept of foreclosure. For example, renting out a property pertains to generating income from a real estate investment rather than a legal repossession process. Selling properties quickly may refer to market strategies but does not involve the legal aspects linked to repossession due to mortgage defaults. Lastly, a type of loan for purchasing homes simply defines a financial instrument rather than the consequences of a defaulting on a loan.