Foreclosure Process
*This is a generalized breakdown of the foreclosure process. Foreclosure laws and legal procedures vary from state to state.
What is a foreclosure?
A foreclosure is legal proceeding usually followed by a court order which allows the lender, mortgagee or lien holder to redeem the property from the property owner. Foreclosures are most commonly used by banks or financial institutions to repossess properties whose owners default on their mortgage obligations.
Steps to foreclose on a home
Pre-foreclosure Period – This is when the lender files with the town records a Notice of Default (NOD) or Lis Pendens (LIS) usually after 2-6 months of non-payment. After this 
filing the property owner than has a certain timeframe to correct the default and get brought up to date with their mortgage or face being foreclosed on. If the borrower still does not come clean with their delinquent mortgage payments than a notice of sale is issues and a foreclosure auction is scheduled.
Auctions – Depending on the state and county a foreclosure property sale can take place at the county courthouse or at the foreclosed properties themselves. At the public auction the lien holder will be present as well as other investors or home buyers that are interested in buying the property. The bank is most concerned in recouping the mortgage amount that they laid down on the property and any legal expenses and fees that they have incurred through the foreclosure process. They are not in real estate business so they would much rather get their money back than the foreclosed properties at the auctions. But they still will not lose the value of their mortgage completely so bidders will usually have to come close to what they are owed. At foreclosure auctions the property is sold to the highest bidder, weather it be the bank, investor or home buyer.
Bank Owned, REO – If the bank does not got an expectable bid at the foreclosure auction than they repossess the foreclosed properties. This is known as REO properties or “Real Estate Owned”.