What does the term "foreclosure" refer to?

The term "foreclosure" specifically refers to the legal process through which a lender takes possession of a property when the borrower fails to make mortgage payments. This process typically occurs after a period of missed payments and generally involves the lender selling the property to recover the remaining balance on the loan. Foreclosure serves as a means for lenders to mitigate their losses when borrowers default on their obligations, ultimately leading to the sale of the property at a public auction or through other means.

The other options pertain to different concepts in real estate and mortgage lending. The second option describes adjustable-rate mortgages, which fluctuate based on market conditions, but it does not relate to foreclosure specifically. The third option discusses property value assessments, which evaluate the worth of a property but are unrelated to the foreclosure process. Lastly, the fourth option refers to renegotiating mortgage terms, which is a strategy to avoid foreclosure but distinct from the foreclosure action itself. Understanding these distinctions can help clarify the unique implications and processes associated with foreclosure in the lending context.