Foreclosures occur when a homeowner defaults on a mortgage payment. In order to rectify the massive amount of debt that occurs when a homeowner defaults on their mortgage payment, the mortgage lender has the right to pursue a foreclosure. After the appropriate complaints are filed, the property is put up for auction and bought by the highest bidder. Property foreclosures can be a very frugal way for homebuyers or real estate investors to purchase property, since foreclosures are often sold for much less than their true market value.
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