A Foreclosure home is when a property is in a legal process in which a lender attempts to recover the balance of a loan. At this point the borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Foreclosure Traps to Avoid. You’ll find the lowest prices for foreclosed homes by buying them at auction. … A safer choice is to buy homes that are owned by a bank. These properties, often referred to as REO or real-estate owned homes, have already been through the foreclosure process, with banks having taken them over.