This property may/may not end up as a foreclosure; until the process is complete, the owners retain the right to sell their home, attempt to refinance or obtain a loan modification; do a short sale; or pay any arrearages to bring their mortgage current.
I also see in our MLS that the home had been listed for sale; the property owners were, in fact, attempting a short sale. I also see that the short sale may not have been successful, as the listing expired about two weeks ago.
If the home does become a foreclosure, first it will go to Sheriff Sale, at which time the bank will bid what they're owed; any 2nd mortgage or additional lien holders have the right to bid higher, as do members of the general public. Sheriff sale buyers take the property as-is/where-is, sometimes with occupants in residence. Also, you cannot be subject fo financing to purchase at Sheriff sale.
If no one steps up to the plate at the Sheriff sale, the bank will more than likely take the property over and after a period of time has elapsed (anywhere from weeks to years) it will come to market as an offered foreclosure, listed in the MLS for open sale by either the lender or the mortgage insurance company (or FHA/VA).
If I can be of further assistance, please don't hesitate to call, text, or email me.