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.

RELATED TERMS
  1. Foreclosure Action

    The legal proceedings initiated by a lender in the case of mortgage ...
  2. Foreclosure Filing

    The initial legal process of selling a mortgaged property that ...
  3. Short Refinance

    The refinancing of a mortgage by a lender for a borrower currently ...
  4. Serious Delinquency

    When a single-family mortgage is 90 days (or more) past due and ...
  5. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  6. Zombie Title

    A right to ownership and possession of a home that remains with ...
Related Articles
  1. Personal Finance

    Buying Foreclosures At A Bargain Price

    Learn how to buy a foreclosed home at a discount.
  2. Investing

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  3. Personal Finance

    Don't Get Trapped in a Zombie Foreclosure

    Understand how foreclosures work and you can avoid the disastrous consequences of having a zombie foreclosure.
  4. Investing

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  5. Trading

    Short Sales And Foreclosures: When It's Time To Move On

    Sometimes it's better to cut your losses, but foreclosures and short selling can have devastating impacts on your credit score.
  6. Personal Finance

    How To Delay Foreclosure

    While losing a home can be a traumatic event for you and your family, it's best to find ethical means of delaying or avoiding foreclosure, even if it takes more time.
  7. Personal Finance

    What Homeowners Need To Know About Zombie Titles

    Understanding how the foreclosure process normally works - and how it dysfunctions in today’s market - will help you avoid becoming a victim.
  8. Personal Finance

    Is Foreclosure Ever a Good Idea?

    Foreclosing on a home has major ramifications that can last for years, but for some, foreclosure may seem like the only option.
  9. Personal Finance

    The Lowest Foreclosure Rates In America

    Despite more foreclosures and a high unemployment rate, signs of life are emerging in the U.S. real estate market.
  10. Markets

    Top 6 Scariest Neighborhoods For Homebuyers

    If you're looking for a spooky spot this Halloween, these communities boast the most horrifying foreclosure rates in the country
RELATED FAQS
  1. How is a leveraged buyout different from a buyout?

    Learn about leveraged buyouts and circumstances under which an acquiring company wishes to pursue a buyout funded mostly ... Read Answer >>
  2. What is PMI, and does everyone need to pay it?

    Also known as "Primary Mortgage Insurance," PMI is the lenders (banks) protection in the event that you default on your primary ... Read Answer >>
  3. My mortgage payments are no longer affordable; is there anything that I can do to ...

    The most important thing for you to remember if you find that you may not be able to make this month's mortgage payment is ... Read Answer >>
  4. What are the best ways to pay off my mortgage quickly?

    Learn how mortgage payments may be reduced and how to save thousands on mortgage loans by lowering the interest and principle ... Read Answer >>
  5. How can I avoid paying private mortgage insurance (PMI)?

    Private mortgage insurance (PMI) is an insurance policy that protects lenders from the risk of default and foreclosure, and ... Read Answer >>
  6. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
Trading Center