Which option best describes the term "foreclosure"?

The term "foreclosure" refers specifically to a legal process through which a lender takes possession of a property when the borrower fails to meet the required mortgage payments. This process often occurs after a series of missed payments, during which the lender initiates legal proceedings to recover the outstanding loan balance by selling the property. When a lender forecloses on a property, they aim to recoup their losses from the mortgage lent to the homeowner.

The other options describe concepts related to real estate and lending but do not define foreclosure accurately. A private sale by the owner is a voluntary transaction, refinancing refers to obtaining a new mortgage to replace an existing one, and an agreement to modify terms indicates a cooperative negotiation aimed at altering the original mortgage agreement rather than the lender taking possession of the property. Therefore, the best description of foreclosure is indeed that it is a legal process where the lender takes possession of the property.