The Foreclosure Flow

When discussing the foreclosure and pre-foreclosure process, many terms are tossed around, for example, short sale, assumed mortgages, trustee sale and REO auctions. Understanding these terms and how they fit into the overall process can be confusing. Following is a flowchart that will help to clarify these terms and how each of these functions interacts.

As the flowchart shows, if the homeowner cannot keep up the payments, the process follow one of three paths: an assumed mortgage, a short sale, or a trustee sale that could eventually lead to an REO auction. Note that the trustee auction and the REO auction are not the same event.

For more information on this subject, see Matthew Padilla’s Orange County Register’s article “Some buyers win with short sales bets.” Also see “Short Sales and Foreclosures.” And for tips on how to avoid foreclosure, see the U.S. Department of Housing and Urban Development’s “HUD Releases Tips for Avoiding Foreclosure.”