What defines a "foreclosure" in real estate?

A foreclosure is defined as a legal process initiated by a lender to recover the amount owed on a defaulted loan by taking ownership of the mortgaged property. In essence, when a borrower fails to make the required mortgage payments, the lender has the legal right to pursue the foreclosure process. This typically culminates in the property being sold at auction or through other means to recover the lender’s losses.

This definition aligns with the concept that foreclosure is fundamentally tied to a borrower’s failure to meet their loan obligations, emphasizing the legal actions taken by lenders in such situations. The other options describe different concepts within real estate that do not capture the definition of foreclosure. Recognizing foreclosure as a legal action rather than a market trend, rental agreement, or appraisal helps clarify its specific role in the context of real estate transactions.