How to Understand Foreclosures?

The first step is usually setting the date for a foreclosure sale. This is done through the court in some states, but in “deed of trust” states, the bank is able to set the sale date without going through the courts. Either way, the lender must notify the borrower of the sale date. Usually, the notice is published in a local newspaper. In some areas, the lender may also be required to mail a notice to the buyer and/or post it at the property.

After the notice of sale is published and served, there is another waiting period before the actual sale date. On the date of the sale, the property is auctioned to the highest bidder. The lender usually starts the bidding. If no one bids higher than the lender’s opening bid, the lender takes ownership of the property subject to the redemption rights of the borrower, if any.

In some states, there is no redemption period and the lender takes possession of the property immediately following the sale. In other states, the borrower is permitted to retain possession of the property until the end of the redemption period. If the borrower is able to repay the entire loan balance plus fees before the redemption period ends, he is able to regain ownership of the property. If not, the lender takes possession and can sell the property.

Understanding foreclosure can help you know what to expect if you are going through the foreclosure process, or if you are wondering how to get started buying and selling foreclosures for profit. By knowing how the foreclosure process works, you will have the best chance to save your home or find out about the homes that are being foreclosed in order to find a good deal for your real estate investment portfolio.