Foreclosure Buyout


DEFINITION of 'Foreclosure Buyout'

A refinancing program that allows a homeowner to avoid foreclosure on their home. Foreclosure buyouts are typically a refinancing loan which the homeowner obtains to cover the portion of the current mortgage that is in default. Of course, finding a lender that will lend to a borrower that is in the process of being foreclosed on can be difficult and if successful, the loan will usually be accompanied by a high interest rate.

BREAKING DOWN 'Foreclosure Buyout'

Foreclosure buyouts skyrocketed in the wake of the 2008 subprime meltdown. Customers who use this service generally are required to have a minimum of 25% equity in the home before a loan is considered. This is to offset the risk to the lender should the borrower default on the foreclosure buyout loan. Foreclosure buyouts can also be referred to as foreclosure bailouts.

  1. Real Estate

    Land plus anything on it, including buildings and natural resources.
  2. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  3. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  4. Involuntary Foreclosure

    When a borrower defaults on a home mortgage loan and the lender ...
  5. Secondary Buyout

    A type of leveraged buyout in which a financial sponsor or private ...
  6. Creditor

    An entity (person or institution) that extends credit by giving ...
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