Real Estate Owned or REO is a term used in the United States to describe a class of property owned under the patronage of a lender—typically country management, a bank, country management agency and loan insurer—after an unsuccessful sale at a foreclosure auction. The beneficiary will legally repossess the property, when there’re no bidders that are interested. This is commonly the case when the amount owed on the home is higher compared with the current market price of this foreclosure property, such as with a lofty loan to value mortgage following a housing bubble. As as the beneficiary repossesses the property it is listed on their books as REO and categorized as an asset.
The term REO originates from the term other real property owned, which is used on fiscal statements to classify a property owned with the help of a fiscal institution but which is not first-hand related to its business. The vital distinction underlying REO is between lenders versus entrepreneurs for which housing industry management is the primary business. Lenders are generally in making business loans with the intent that nearly all of these loans will be repaid in full with interest. Considering the above said. Seizing, reselling and managing real property collateral to recover unpaid loan balances is secondary to lenders’ primary threshold of entrepreneurship.
In balance sheet terms, REO assets are considered non earning assets for purposes of regulatory accounting. In public context banks in the, the term REO is legally defined under the patronage of headquarters of the Comptroller the headquarters of the Currency in regulations promulgated pursuant to 12 § 29.
As as a property goes in a distressed status the beneficiary will want to determine equity amount that the property has. That said, broker’s Price Opinion or order an appraisal. Based on equity amount that is determined from the BPO, the bank will determine whether to allow a short sale. The beneficiary will continue the foreclosure process, when no short sale is requested with the help of the home owner. In case the beneficiary is unable to sell the property thru a short sale or at a foreclosure auction it will now be a REO property. The beneficiary will go through trying thing to sell the property on its own or obtain the service of a REO Asset Manager, after a repossession from which the property proven to be classified as REO. Now please pay attention. The beneficiary will remove the liens and additional debts on the home and try to resell it to the public, either thru future auctions, direct marketing thru a real estate broker, or by itself.
The larger banks and country management institutions have REO/asset management departments that field bids and handle, oversee up keep and offers sales. Nevertheless, some REO properties on the open market will be listed in MLS by the broker.
Currently today in Hillsborough, Pasco & Pinellas County there are 744 Bank Owned homes Active for Sale, 959 Homes under contract to be sold. If you are interested in purchasing a Bank Owned home you should contact Nick & Cindy Davis at 813-300-7116 or simply click here and we will be in touch.
REO Home for Sale
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