Trying to grasp how exactly this works, Buying a pre-forclosure

[Tom Pearsall]

Hello,

I've been trying to wrap my brain about how all this works and I have a question that should be easy enough for someone with experience to answer. I have been looking around my neighborhood on zillow trying to practice analyzing and finding deals and I'm a little foggy on how this works with existing mortgages. Lets use a hypothetical, say I found a home on zillow in pre-forclosure. The original loan taken out was for 200k about 10 years ago. The owner is now $5k behind in payments and has about $150k worth of equity in the home. If someone where to want to negotiate a deal with the owner to buy the home for cash how would they deal with the existing mortgage. Would they have to offer enough to the owner so it would pay off the remainder of the mortgage, or just enough to get his payments caught up plus however much they work out? Would the potential buy be able to offer say $40k or would the offer have to be AT LEAST the amount of the balance remaining on the note? Say the owner accepts the offer of $40k, what happens to the mortgage at that point? Would the buyer then officially own that home and the previous owner be on the hook still for the remainder of that mortgage ($10k at that point), or would the new owner be responsible for the remaining amount. If the old owner doesn't end up paying the rest of the mortgage off after the deal can the lender then take the property that you now own, or is this impossible and the deal would never even happen if it was less than the remaining mortgage amount?

I hope this question made sense. I appreciate any attempts at helping me grasp this idea. Thank you.

-Tom