This means that this particular loan for $108,000 is in default. This could be one of two or three loans on the property, or it can be the only loan on the property. If it is the only loan, chances are the homeowner fell behind on their payments on this one loan--but that homeowner can do a regular sale to pay it off and recover whatever equity he has in the property and move on. If this is a second or third loan on the property, and the house is worth less then the balance of these loans put together, then the seller will need to do a short sale to sell the home or simply let the bank foreclose. At any rate, with this notice of default, he will definitely have some agents calling him and knocking on his door to try to help him out with short sale or regular sale options. He might also have individuals like yourself knocking on the door offering to buy it from him without agent involvement. If you were trying to purchase this property or any other property in a similar situation, and did get a purchase agreement with the owner, then you could certainly get a mortgage loan to complete the purchase, unless the house is in such terrible condition that it doesn't qualify for mortgage loan, in which case you would need to pay cash for it.