Foreclosure Buyout

See: Foreclosure. And then think: Put the company on eBay.

A foreclosure happens when a borrower defaults on a property-based loan, and the lender takes ownership of the property as payment. A foreclosure buyout represents an alternative to this.

In a foreclosure buyout, a second mortgage is taken out on the property, with enough extra cash brought in to pay off the amount owed to the original lender.

You take out a $1.2 million mortgage on your house. You accumulate $200,000 in equity before you lose your job and start falling behind in your mortgage payments. You fall $100,000 behind, raising the specter of an eventual foreclosure.

To avoid that situation, you conduct a foreclosure buyout. You mortgage the $200,000 in equity you built up, using $100,000 of that to get current with your original mortgage.

You then use part of the remaining funds for a resume coach. Better get a job before you fall behind again.