“ REO” stands for “ real estate owned” and typically refers to the inventory of real estate that banks and mortgage companies have foreclosed on and subsequently purchased through the foreclosure auction if there was no offer higher than the minimum bid.
If you see a listing for a property that says “REO,” it means that it’s a property that the lender has taken back. It also means, more than likely, that the property will need some work — people who lose their houses to foreclosure often neglect their upkeep.
On top of that, you can expect that getting a response to your offer will take longer than normal; with so many foreclosed homes on the market, the people who handle the sale of these homes are overwhelmed with work.
All that being said, you can often find good deals in a lender’s REO inventory. If you have the time, the patience and good financing, there are lots of opportunities to be had. Best of luck!
Source: Mortgage News Daily
Foreclosure is to shut out, to bar, to extinguish a mortgagor’s right of redeeming a mortgaged estate. It is a termination of all rights of the homeowner covered by a mortgage. Foreclosure is a process in which the estate becomes the absolute property of the lending institution.
Foreclosure numbers are growing daily. Of the one hundred twenty or so million homes in America, more than 4% or roughly 4.8 million of them are facing foreclosure. Some of these homeowners are able to work their way out of foreclosure, however, according to MBA there were about 500,000 homes that went through foreclosure last year. Foreclosure threatens these homeowners because they are late or seriously behind on their mortgage payments.
The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.
Foreclosure is applied to any mehod of enforcing payment of the debt secured by a mortgage, by taking and selling the estate. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.
Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). Depending on your state, the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.
Source: Foreclosure University