How do foreclosure sales work?

Question

I was wondering how foreclosure through a bank works? Such as, does a person default on thier loan and someone else takes over the remaining debt?

so lets say theres 450,000 left on a 600,000 loan, I would be able to owe somewhere around 450,000 and the previous owner loses the 150,000 he invested?

Answer 1

The home first goes to auction were the bank tries to recover the loan amount. The auction is the riskiest time to buy the home, but also the cheapest. (Before auction can be cheaper, but not technically part of the process.) Most of the time people have second mortgages on the property, and you will be responsible for them if you buy the house.

If they are not sold at auction the bank will list them "as is." At this point the bank will have cleared all leans on the property and allow you to do a walk through. You can get deals here, but the bank is not into loosing money. They know what the property is worth and will list it at that price. One of the biggest myths is that the bank "only wants the money for the loan." The bank wants every dime they can get for the property. Many times they list it at 5% above the appraised value, or more than the home is even worth.

Answer 2

kinda in a way. when some one defaults on a loan the bank takes the house from the person and sells it for the remaining amount or a little more. they just try to get the money back that was put out on it. some one can purchase the house for that amount and it will be on there own loan and/ for full amount.