A foreclosure is a process through which the lender can take possession of the home. Bank foreclosures are those where the homeowner has failed to make the necessary payments or when they have defaulted on the loan. In a way it is a termination of homeowners' rights on the property or home as covered under the mortgage. To Make a foreclosure happen, the lender has to first file a public default notice, also known as a Lis Pendens or Notice of Default. There are three ways through which a foreclosure can end and they are:

If the homeowner/borrower is able to reinstate the loan during the grace period as instructed by the state law/court. In the grace period or pre-foreclosure period, if the homeowner pays off the default amount then the property will not go into foreclosure.

The homeowner/ borrower can sell his or her property to another buyer during the pre-foreclosure period and thus pay off the loan. If he or she pays off the loan then their credit history will not show any foreclosure.

The lender takes repossession of the home to re-sell it through an auction. The lender will get ownership of the property through a mutually signed agreement with the homeowner . A property owned by the lender is known as a bank-owned property or REO property.