Bank Foreclosures Key Terms
Learn important terms in bank foreclosuresThe variety of types of bank foreclosures can make learning about this topic a bit difficult. A foreclosure results when a lender repossesses a house that the buyer has defaulted on. The ownership of the house is given to the lender, the VA or HUD, depending on the guarantees on the loan.
REO properties, real estate owned properties
Pre-foreclosureProperties that are in the process of being foreclosed on, but are not yet bank owned, are called pre-foreclosure properties. Investors may offer to buy the property directly from the homeowner, usually at the break even point to pay off the lender to settle the debt.
Short saleA short sale is another option to avoid the foreclosure process. It may be part of the process some homeowners go through when they enter foreclosure with a home worth less than what is owed to the bank. In a short sale, the homeowner hires a real estate agent to sell the property. The agent finds someone willing to purchase the property. But in order for a short sale to occur, the bank needs to agree to sell the property and absorb the loss.
HUD homes, HUD foreclosuresWhen a residential property is a HUD home, or U.S. Department of Housing and Urban Development home, the property was obtained through a foreclosure on an Federal Housing Administration (FHA)-insured mortgage. These properties are similar to bank foreclosures in how they are obtained, sold, financed and invested in. HUD foreclosures must be purchased through a HUD approved real estate agent, usually at auction.
U.S. Department of Housing and Urban Development website to learn more about this type of foreclosure.
Tax deed salesTax deed sales are sales of property in which the homeowner failed to pay property tax. Those who purchase bank foreclosures may also be interested in these properties. The properties are sold for the back taxes, penalties and court costs, usually for well below their value. These properties are often sold at a public auction to the highest bidder.
VA propertyAnother type of foreclosure is through the VA, or Veterans Affairs Office. The VA helps to guarantee loans to mortgage lenders for veterans of the Armed Forces. If a homeowner defaults on his VA guaranteed mortgage, the VA gains ownership of the property and offers it for sale.
U.S. Department of Veterans Affairs to learn more about this type of foreclosure.
Under water, or upside down mortgageWhen the value of a home is less than what the homeowner owes the mortgagor, the property is said to be under water, or upside down.
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