Foreclosure is a process which allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan.

The foreclosure process begins when a homeowner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Note of Default or Lis Pendens.

The foreclosure process can end in one of four ways.

1. The borrower/owner reinstates the loan by paying off the default amount during the grace period, as known as pre-foreclosure.
2. The borrower sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
3. A third party buys the property at a public auction at the end of the pre-foreclosure period.
4. The lender can take ownership of the property, usually with the intent to resell it on the open market.

Ownership takes place through agreement with the borrower/owner during pre-foreclosure, this is done either through short sale foreclosure or by buying back the property at the public auction.

Properties repossessed by the lender are known as bank-owned or REO properties (Real Estate Owner by the lender). This foreclosure process allows three opportunities for finding bargains on foreclosure homes.

Contact Byrne & Associates, PLLC, to help you with a foreclosure.