An Overview of Bank Foreclosed Homes Process

Learning everything about bank foreclosed homes process is important before bidding on a property at a public auction. Understanding how bank foreclosed homes are being done may help you in avoiding the same problems that many distressed homeowners experienced.

What are Foreclosures and Bank Foreclosures?

Foreclosures are legal process initiated by mortgage holders when the borrower reneged on his responsibility by failing to pay his monthly mortgage. The distressed property is then sold at public auctions to allow the lenders to recover their investments.

Bank foreclosures may occur for various reasons such as job loss, health problems, economic conditions and divorce.

Upon taking out a loan to buy the property, the borrower signs two documents. One document is a promissory note which outlines the conditions and terms of the mortgage loan and the obligations of the borrower. The other document is a mortgage contract that establishes the home as security or collateral for the mortgage loan.

When the borrower starts to miss out on his payments, he is considered in default and is in violation of his obligations which he agreed upon and signed. The lender may work with the borrower to fix the delinquency problem. However, if the borrower still could not fulfill his payment obligations, the bank will start the foreclosure process.

Bank Foreclosure Methods

There are two ways that bank foreclosed homes are being done; non-judicial and judicial. Non-judicial foreclosures do not need court approval. This method relies on the power of sale clause contained in the property deed. The clause gives banks the authority to sell a home when the borrower defaults.

Judicial foreclosure requires court approval. This foreclosed homes method applies to states that use mortgage lien procedures. When the distressed property is sold at public auctions, banks are allowed only to recover their costs, but not to profit from the property. However, the bank has the option to ask for a deficiency judgment when the sale price of the property is less than what the borrower owed.

There are two ways that bank foreclosed homes are being done; non-judicial and judicial. Non-judicial foreclosures do not need court approval. This method relies on the power of sale clause contained in the property deed. The clause gives banks the authority to sell a home when the borrower defaults.

Judicial foreclosure requires court approval. This bank foreclosed homes method applies to states that use mortgage lien procedures. When the distressed property is sold at public auctions, banks are allowed only to recover their costs, but not to profit from the property. However, the bank has the option to ask for a deficiency judgment when the sale price of the property is less than what the borrower owed.

Find Bank Foreclosures by Top Cities

• Orlando
• Tampa
• Miami
• Atlanta
• Cleveland
• Cincinnati
• Charlotte
• Phoenix
• Newark
• St Louis
• Richardson
• Reston