What principle does intermediate mortgage theory emphasize?

Intermediate mortgage theory is a legal concept that highlights the nature of the relationship between the borrower (mortgagor) and the lender (mortgagee) during the mortgage process. Under this theory, the mortgage does not immediately transfer full legal title to the lender. Instead, it emphasizes that the borrower retains equitable title to the property while the lender holds a lien interest.

In the context of this theory, foreclosure is a critical process. It is the legal mechanism by which the lender can take possession of the property if the borrower defaults on the mortgage. Through foreclosure, the lender can obtain legal title to the property and subsequently sell it to recoup losses. This aspect is central to intermediate mortgage theory, as it establishes the lender's rights in the event of default while still allowing the borrower to maintain some ownership rights.

The other options provided do not accurately reflect the principles of intermediate mortgage theory. For instance, titling the property to the mortgagor or allowing complete possession to the lender would misrepresent the balance of rights held between the parties. The concept of an automatic transfer of title upon payment is not representative of how mortgage agreements function under this theory, as it typically depends on fulfilling specific contractual obligations rather than an automatic transfer scenario.