How is foreclosure defined in real estate terms?

Foreclosure is defined as the legal process by which a lender takes possession of a property, typically because the borrower has defaulted on their mortgage payments. In this context, the lender initiates foreclosure proceedings to recover the amount owed under the loan agreement. This process involves the lender seeking legal action to sell the property, often through a public auction, to recoup the outstanding debt.

The other options do not accurately describe foreclosure. An auction may occur as part of the foreclosure process, but it is not what foreclosure is defined as. Settling tenant disputes is unrelated to foreclosure, as it pertains more to landlord-tenant relationships rather than mortgage-related issues. Lastly, renegotiating terms between a borrower and lender refers to loan modification, which is separate from the foreclosure process itself. Understanding these distinctions is critical for anyone involved in real estate transactions or studying real estate principles.