What Is a Bank Owned Home?
A bank owned home is a residential property taken over by banks or lenders after it failed to get sold at a foreclosure auction. These types of properties are also known as REO or real-estate owned and the process by which they become an REO entails several steps.
First Step: Loan Default
A house enters the first phase of becoming a bank owned home once the homeowner fails to meet his monthly mortgage obligation. Typically, if the homeowner failed to pay his loan for 90 days, the lender will be obliged to send him a notice of default to let him know that failure to make the loan current will result in foreclosure.
Second Step: Pre-Foreclosure Sale
Failure to come up with the necessary payment may result in a pre-foreclosure sale; which basically means the lender can offer the property up for sale without actually foreclosing on it. Even at this stage, the homeowner still has a chance to make his payment current or negotiate with the lender for an alternative to foreclosure or pre-foreclosure sale which will allow him to keep his home.
Third Step: Foreclosure Auction
Some lenders do not bother going through a pre-foreclosure sale but automatically start the foreclosure process once the homeowner fails to meet the predetermined time for paying his mortgage loan. The property is now offered as a foreclosure auction home where potential buyers can bid for the property. In majority of cases, the minimum bid covers the amount of mortgage owed by the homeowner plus other costs incurred during the repossession.
Fourth Step: Property As Bank Owned Home
Nearly half of the properties offered at foreclosure auctions do not get sold at the auction sale, which means that the lender or bank will have to assume ownership. Once ownership of the property reverts back to the bank or lender, they are then responsible for its upkeep, sale or any action that will be required while the property is in their possession.
Buying Bank Owned Homes
Banks are most likely inclined to sell these properties as soon as they could to eliminate the trouble of having to pay for their maintenance.
Purchasing a bank owned house can be a great way to save money since most of them are offered at very low prices. For potential buyers who have yet to experience buying a bank owned home, gathering information on the location of these properties and how much they can cost should be their first step.
Listing services offered by BankOwnedHome.net are the easiest and most reliable way of getting information on bank owned houses. Subscribers can enjoy easy access to up-to-date, comprehensive and accurate data on bank owned properties for sale such as location, description of the property, estimated price and available financing.
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