How is "foreclosure" defined?

Foreclosure is accurately defined as the legal process by which a lender takes possession of a property when the borrower fails to make mortgage payments. This typically occurs when the borrower is delinquent on their loan obligations, leading the lender to initiate legal proceedings to recover the secured asset. The process serves as a means for lenders to mitigate losses on defaulted loans by reclaiming the property and potentially selling it to recover the outstanding debt.

This definition encompasses the fundamental aspects of foreclosure, including the roles of both the lender and the borrower and the legal framework surrounding the enforcement of loan agreements. It is important to understand that foreclosure is primarily a remedy for lenders facing default, as it involves strict legal procedures and can significantly impact the borrower's credit and ownership rights. The other options do not relate to foreclosure's legal context or process.