- Foreclosure homes are houses that have been "repossessed" by the mortgage lender, usually for non-payment.The lender or bank has removed the rights of the property owner.
- Personal and financial factors can contribute to a home going into foreclosure. A property owner whose home is subject to a mortgage may experience a life-changing event such as a reduction or loss of wages, a divorce, death or rise in mortgage costs due to interest or taxes. All of these factors could cause an interruption in mortgage payments and ultimately result in a foreclosure.
- Foreclosed homes can be either judicial foreclosures or non-judicial foreclosures. If a home is a judicial foreclosure, that means it is being handling in a court of law. This process eventually leads to a sheriff's sale of the property. However, if the home is a non-judicial foreclosure the courts are not involved. The home goes into default and then eventually is put up for auction.
- Depending on the state, the foreclosure of a home can take as little as four to five months and as long as two years. In all foreclosures, the process begins with the owner defaulting on the loan. If the owner cannot come to a payment agreement with the bank, the house then moves on to the notice of a sale by auction.
- Foreclosed homes are usually priced under market value, making them a good source of instant equity. Foreclosed homes also offer the opportunity for a consumer to purchase a home because of its low price when the opportunity may not have otherwise been available.
- Because foreclosed homes are usually sold under market value, the biggest disadvantage of a foreclosure sale is the effect it has on the surrounding property values. A home's value is determined by an appraisal, which takes into account, among other things, the recent selling prices of comparable homes in the same area. When a house sells for a below-market price, the sale also lowers the value of surrounding properties. Also, foreclosed homes may remain vacant for extended periods and become victims of disrepair or even vandalism.
- The government has programs that support the purchase and repair of foreclosed homes. Sallie Mae and Freddie Mack are two such programs. In both, the home buyer is given the opportunity to purchase and repair the foreclosed home in which they will reside. Such programs aid in ridding a community of foreclosed homes and provides the advantages of home ownership.
