Explain the term "foreclosure."

The term "foreclosure" refers to the legal process by which a lender takes possession of a property when the borrower fails to meet the mortgage obligations. This typically occurs after a series of missed payments, leading the lender to initiate foreclosure proceedings to recover the outstanding debt. Once the foreclosure process is complete, the lender can either take ownership of the property to sell it or pursue other legal remedies.

Understanding this process is crucial in real estate, as it involves various legal steps, such as filing a notice of default, offering the borrower an opportunity to cure the default, and ultimately, if unresolved, selling the property at auction. Foreclosure can significantly impact both the lender's and borrower's financial situations and is often associated with a decrease in property value due to the distressed nature of such sales.

The other options describe different aspects of real estate but do not accurately define foreclosure. For instance, buying property at auction refers to acquiring property, not taking possession due to default, while assessing property value and tax reduction methods pertain to different processes within real estate management.