Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.

You have already received info about what notice of default and bank owned means and why the "prices" are so low. As far as the process of buying a foreclosed property is concerned. There are essentially 3 ways. The foreclosure process ends with what's called a trustee sale which is conducted at the court house steps.

If the home doesn't sell, the lender will hold on to the property, which is known as real estate-owned, or REO. Throughout most of the foreclosure process, until five days before the auction date, you are in a reinstatement period. You can make all your past payments in full along with penalties and keep your home.