What is defined as the state of having failed to make payments on time, potentially leading to foreclosure?

The concept of being in a state where payments have not been made on time is known as delinquency. When a borrower misses one or more mortgage payments, they enter into delinquency. This often serves as an initial warning sign that they may be experiencing financial difficulties. If the situation is not remedied and payments continue to be missed, it can lead to more serious consequences, such as default or foreclosure.

In contrast, default typically refers to a more advanced stage of non-payment, often defined by specific legal criteria, and is usually a prerequisite for initiating foreclosure proceedings. Foreclosure itself is the legal process through which a lender seeks to recover the balance of a loan from a borrower who has stopped making payments. Repossession generally applies to personal property rather than real estate and involves reclaiming items that were financed but not paid for. Thus, delinquency accurately describes the state of having failed to make payments on time, making it the correct choice for this question.