What is a pre-foreclosure?
A property enters pre-foreclosure when the borrower/owner misses a number (usually 3 or more) of mortgage payments and defaults on the loan secured by the property. Once this occurs the lender can file a Notice of Default or Lis Pendens (pending lawsuit) against the borrower/owner. During the pre-foreclosure process the borrower/owner can stop the foreclosure process by paying off what is owed, selling the property, or by transferring ownership of the property to the bank. If the borrower/owner does nothing during the foreclosure process, the property is sold at a public foreclosure auction at the end of the state law specific pre-foreclosure period.
A pre-foreclosure is the period before the foreclosure auction when the borrower is more than 90 days delinquent on their mortgage payment and a notice of default has been recorded. The main purpose for this phase of foreclosure is to give the borrower time to sell their property or to pay back their loan to the lender. This is often the first phase that an investor or homebuyer has an opportunity to negotiate with the homeowner or lending institution to purchase the property.
