The bank is "owed" the remaining principal balance, arrears in interest, any money paid out for taxes, forced placed insurance and late fees If you are the current homeowner and trying to avoid foreclosure, the bank may consider a loan modification that rolls the arrears into new loan terms and may even forgive part of the late fees or interest owed to date. .
If you are trying to buy the house, you may be able to buy the property for less:
1. If the house has not yet gone to foreclosure sale, the bank may agree to a "Short Sale", if the current homeowner agrees. The key is to offer the bank a way to take a smaller loss. If the bank forecloses, they will have expenses for the legal process, and have no money coming in until they get title to the home and manage to sell it as Real Estate Owned (often called REO or Bank-Owned property)
2. If the bank has already foreclosed, you will buy it like any other home on the market EXCEPT the bank is not required to provide any disclosures on the property condition. It is all up to you to make sure you have an accurate picture of the home's condition before you commit.
If you are the homeowner trying to save the house, call the mortgage company TODAY and get your options. If you are trying to buy the home either before or after the foreclosure, call a local agent who has experience with short sales and bank owned properties. The process can require some effort either way, but it is worth it!