What is described by the term foreclosure?

The term foreclosure refers to a legal process initiated by lenders to take possession of a property when the borrower has failed to meet their mortgage obligations, typically due to missed payments. This process allows the lender to recover the amount owed on the loan by taking ownership of the property, which serves as collateral.

During foreclosure, the lender might sell the property at a public auction to recoup their investment, thus enabling them to recover the outstanding debt. This process is governed by state laws, and it differs in terms of procedures and borrower rights from one jurisdiction to another.

Other options describe different scenarios related to real estate but do not accurately reflect the definition of foreclosure. The voluntary sale of a home described in the first choice suggests a more deliberate action taken by the homeowner, rather than the involuntary nature of foreclosure. The third choice about reducing property taxes does not pertain to the mortgage process at all. Lastly, negotiating mortgage terms with a lender does not encompass the legal aspect of reclaiming possession of a property, which is central to the foreclosure process.