i also don’t really get “foreclosed” i’m guessing it means they’ve missed mortgage payments?
Edit: thanks everyone, lots of good info here!
In: 4
When people take out a bank loan for a home the home itself is usually listed as collateral in the loan paperwork. (i.e. *”If I can’t pay you back, you can take the house I bought with that money as repayment.”*)
Foreclosure is what it’s called when somebody has failed to make mortgage payments (defaulted), etc. for long enough that the bank actually follows through with the act of taking the collateral. It is basically another kind of repossession. (i.e. *”Fine, if you don’t want to pay me back, I’m taking the house then.”*)
However, owning a house doesn’t really do a bank any good so typically they’ll want to simply sell the home for as much money as possible as quickly as possible – usually through a housing auction.
People “buy foreclosed homes” by going to these kinds of auctions and making the winning bid.
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