What does lien theory indicate about property ownership?

Lien theory suggests that in a mortgage agreement, the borrower retains the title to the property while the lender holds a lien against it. This means that while the borrower has ownership rights and can occupy and use the property, the lender has a secured interest through the lien. If the borrower fails to repay the loan, the lender can enforce their claim by foreclosing on the property.

This distinction between holding title and having a lien is critical in understanding how property ownership and lender rights function under lien theory. It highlights the borrower's retained rights as an owner, balanced against the lender's right to recover the loan amount through the lien in case of default. Thus, the correct understanding of lien theory directly supports the notion that the borrower is still considered the legal owner of the property while being subject to the lender's financial interest in it.