What does judicial foreclosure involve?

Judicial foreclosure is a legal process that occurs when a lender seeks to repossess property due to a borrower's failure to make mortgage payments. This process involves a court overseeing the foreclosure, which ensures that the due process of law is followed. The essential element of judicial foreclosure is that it requires a court (usually a civil court) to issue an order for the sale of the property in question.

In judicial foreclosure, the lender must file a lawsuit against the borrower to obtain a court judgment that authorizes the sale of the property to satisfy the outstanding debt. Once the court issues this order, the property is typically sold at auction, and the proceeds are used to pay off the mortgage debt. This legal process is essential for protecting the rights of all parties involved, including the borrower, which is why the court's involvement is mandated.

The correct answer highlights this critical process of enforcing mortgage rights through judicial means, distinguishing it from other options that refer to different scenarios of property transfer or debt resolution, such as out-of-court settlements or voluntary transfers.