Foreclosure & Auction Glossary
Plain-English definitions of the terms you'll meet buying foreclosures and REO at auction. New here? Start with our guide to buying a foreclosure at auction in New York.
- Foreclosure
- The legal process by which a lender forces the sale of a property after the borrower defaults on the mortgage, to recover the unpaid debt.
- Judicial Foreclosure
- A foreclosure that goes through the courts. New York is a judicial state, so a lender must file a lawsuit and obtain a judgment before the property can be sold.
- Courthouse-Steps Auction
- A public foreclosure sale conducted in person by a court-appointed referee (sometimes called a sheriff or referee sale), traditionally on the courthouse steps.
- Online Foreclosure Auction
- A foreclosure or bank-owned sale hosted on an online auction platform rather than in person. Bidders register and bid remotely; a buyer's premium may apply.
- REO (Real Estate Owned)
- A property that failed to sell at auction and reverted to the lender or bank. Also called bank-owned. REO homes are typically listed for sale afterward.
- Pre-Foreclosure
- The window after a default notice (lis pendens) but before the auction. The owner still holds title and may sell, refinance, or negotiate a short sale.
- Short Sale
- A sale for less than the balance owed on the mortgage, which the lender must approve. Used to avoid foreclosure when a property is worth less than its debt.
- Lis Pendens
- Latin for 'suit pending' — a public notice filed when a foreclosure lawsuit begins. It clouds title and is often the earliest public signal of a foreclosure.
- Notice of Default (NOD)
- A formal notice that a borrower has missed payments and is in default. It usually precedes the foreclosure filing.
- Opening Bid
- The starting price at a foreclosure auction, usually set at the lender's judgment amount (the debt plus fees). Bidding rises from there.
- Credit Bid
- A bid the foreclosing lender can make up to the amount it is owed, without putting up cash — because it would be paying itself.
- Upset Bid
- In some jurisdictions, a higher bid submitted during a set period after the auction that can 'upset' (reopen) the sale before it is finalized.
- Deposit / Terms of Sale
- The down payment (commonly ~10%) the winning bidder must pay immediately by certified funds, under the auction's terms of sale, with the balance due at closing.
- Deficiency Judgment
- A court judgment against a borrower for the remaining debt when a foreclosure sale doesn't cover what's owed. Rules vary by state.
- Owner of Record
- The person or entity legally listed as the property's owner in public records — often the foreclosure defendant, and the party to research for outreach.
- Lien Search / Title Search
- A review of public records for open mortgages, tax liens, judgments, and other encumbrances that a buyer may inherit at a foreclosure auction.
- Bankruptcy Stay
- An automatic hold triggered when the owner files for bankruptcy. It can pause or cancel a scheduled foreclosure sale until the court lifts it.