What is a "foreclosure"?

Foreclosure is specifically defined as a legal process where property is seized due to the owner’s failure to make required mortgage payments or meet the obligations of another lien. When a borrower defaults on their mortgage, the lender has the right to initiate foreclosure proceedings. This process allows the lender to take possession of the property and sell it in order to recover the outstanding debt. Foreclosure is a crucial concept in real estate and finance, as it directly affects the rights of property owners and the actions lenders can take to mitigate losses from loans that are in default.

The other options do not accurately describe foreclosure: transferring property ownership encompasses a broader range of scenarios and doesn't specifically indicate a legal process in the context of debt; title insurance policies serve to protect property buyers and lenders from potential losses related to title issues and are unrelated to the act of foreclosure; and property disputes can involve a variety of issues beyond the financial default that triggers foreclosure.