Which term describes the lender's right to foreclose if the borrower defaults?

• A. Escrow rights
• B. Foreclosure rights
• C. Due on sale rights
• D. Prepayment rights

Answer: (B)

Foreclosure rights describe the lender’s legal remedy to recover a loan by forcing the sale of the property when the borrower defaults. When a borrower misses payments and remains in default, the lender may initiate foreclosure, leading to a sale of the property and use of the proceeds to satisfy the outstanding debt. This is distinct from escrow rights (which relate to holding funds for taxes and insurance), due on sale rights (a clause that can require the loan to be paid in full if the property is sold), and prepayment rights (the ability to pay off the loan early, sometimes with penalties). So, the lender’s right to foreclose is the term that best fits this situation.