What does "foreclosure" mean?

Foreclosure refers specifically to the legal process initiated by a lender when a property owner defaults on their mortgage by failing to make required payments. During foreclosure, the lender seeks to recover the amount owed on the defaulted loan by taking possession of the property and ultimately selling it, typically at a public auction. This process allows the lender to mitigate their losses from the non-payment, as the owner loses their rights to the property.

The other choices do not accurately describe foreclosure. The voluntary sale of a property by the owner involves the owner choosing to sell, rather than being forced to do so due to default. Assessing the value of a property is typically part of property appraisal processes but does not relate to the legal actions taken during foreclosure. Lastly, an agreement to modify loan terms refers to adjustments made to an existing loan rather than the consequence of failing to meet those terms, which is the central issue in foreclosure.