It’s that period between when the lender files a foreclosure notice of default in the public records and the date the property is to be sold at public auction or trustee’s sale. The average time it takes to foreclose on a property varies widely by state, from 90 days to 10 months.

This is the legal and professional proceeding in which a lender obtains a court ordered termination of a individuals right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. The property is then typically put up for auction on the courthouse steps.

The servicer might allow the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the mortgage. The short sale must be an arm’s length transaction with the net sale proceeds (after deductions for reasonable and customary selling costs) being applied to a discounted (“short”) mortgage payoff acceptable to a servicer. The servicer accepts the short payoff in full satisfaction of the total amount due on the first mortgage.

This is where the servicer determines the minimum acceptable net proceeds (minimum net) that the investor will accept from the transaction. The lender will notify the seller of the “approved” short sale where a pre-determined sales price has been indentified and sold at that price point.