Foreclosure is the process by which a lender can take back the home of a borrower that is delinquent on the loan payments. The process may vary by state, but typically has several steps and can be quite lengthy.
Once the borrower has missed payments the lender must let them know they are in default and record a public notice of default.
Once the borrower has received the notice they have a period of time to come up to date with their payments or arrange a short sale.
If they can not come up to date with payments within the stated time frame, the lender can schedule a public foreclosure auction or trustee sale. Notice of the sale must be given to the borrower and the public. On the scheduled date
a public auction will be held.
At a foreclosure auction, the buyer assumes any federal, state and city tax liens on the property. Often times cash is required for purchase. Typically, the bank buys the property back at auction. When this happens the property becomes and
REO, or real estate owned property.
You may see these listed in MLS as lender owned. It means simply that the bank owns the property. The bank typically sells the property as is, with little to no negotiation over inspection issues. They may or may not have utilities activated.
Often these types of sales require that the buyer pay for items that the seller would typically cover, such as utility activation for inspection, smoke certificate and final water reading.
For more information on purchasing an REO property or questions about the home purchase process, contact us.