The legal process whereby the holder of a mortgage tries to reacquire the property for failure to make payments. Since the debt is secured by the property, the lender, as the lienholder, has the right to reclaim the property.
In the United States, this is established by each state. The exact process will vary but the end result is the same. In some states, a court order is required for repossession.
Foreclosures tend to rise at times of economic contraction. If people find themselves out of work, making their regular payments gets difficult. This is often coincided by a decline in real estate prices.
It is a process is undertaken by the holder of the senior mortgage. This is the debt that is paid off first, followed by junior lenders i.e. second and third morgages.