Generally, this is what happens when someone does not pay their mortgage.
Even though there has been default on the loan payments, or no payments, the borrower retains a equitable right of redemption if, some day, he or she were able to find the money and try to exercise their right of redemption by paying all arrears on the mortgage.
But this left lenders (mortgagees) on the tether indefinately.
Equity had to come full circle and allow the mortgagee to force the lender (mortgagor) to fish or cut bait; to pay the arrears or to lose (be "foreclosed) as to the right to redeem.
That out of the way, the mortgagee can then seek a possession order and sell the real property, the proceeds of which go first to pay off the arrears on the mortgage.
In Falconbridge on Mortgages (Rayner and McLaren, Toronto: Canada Law Book, 1977, p. 447), foreclosure was described as follows:
"When the Court of Chancery began to entertain applications by mortgagors for leave to redeem notwithstanding that by default in payment they had caused a forfeiture by breach of condition and had therefore lost their legal or contractual right to redeem, it was obliged in turn, in order to do complete equity, to entertain applications by mortgagees for foreclosure - the effect of a decree of foreclosure being simply to require a mortgagor within a definite time to redeem under penalty of being finally foreclosed or deprived of his equitable right to redeem.
"The .... reciprocal remedy to redemption is foreclosure.
"Equity, which by its interference has prevented the mortgagee from asserting his legal right to absolute ownership under the strict terms of the contract, simply removes the stop it has put on, upon default of the mortgagor in discharging the debt after reasonable time has been given to him, or in other words decrees foreclosure."
To clear the title of this potential, a lender goes to court, demonstrates the default, requests that a date be set where the entire amount becomes payable after which, in the absence of payment, the lender is automatically relieved of the requirement to redeem the property back to the borrower; the debtor’s right of redemption is said to be forever barred and foreclosed.
This cancels all rights a borrower would have in the real property and the property then belongs entirely to the lender, who is then free to possess or sell the property.
The word is frequently used to generally refer to the lender’s actions of repossessing and selling a property for default in mortgage payments.