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Understanding Foreclosures and Short Sales

The current market comprised of foreclosure properties is an unfortunate situation for all parties involved, and
is increasing daily. Here is some information to help you understand the process of foreclosure.

What is a foreclosure? Foreclosure is the legal process by which a bank seeks to recover the amount owed on a mortgage typically due to default. There are several stages in the foreclosure process:
Pre-Foreclosure / Short Sale: Basically, when the proceeds of a home “fall short” of what is still owed on a
mortgage. During this time, the owner may possibly have the option to sell to a third party for less than what is owed on the mortgage and the bank may potentially avoid a costly and lengthy foreclosure process by accepting this lesser amount.
Auction: If the property is not sold during the pre-foreclosure period (if there is one), a public auction is then
typically held to sell the property to the highest bidder. Foreclosure sales may include a minimum bid amount
along with accrued interest, attorney fees and possibly other foreclosure fees. Typically, the property is purchased “as-is.”
Bank-Owned / REO (Real Estate Owned): If the property fails to sell in the pre-foreclosure stage or at auction, ownership reverts back to the lender.

For more information on the legal aspects of the foreclosure process, contact your state attorney general’s office.

For more information contact:
Arlene Wright: awright@williamewood.com
or Shannon Wright:shannonwright@williamewood.com