Real estate owned

This is commonly the case when the amount owed on the home is higher than the current market value of the foreclosure property, such as with a mortgage loan made at a high loan-to-value during a real estate bubble.

Seizing, managing and reselling real property collateral in order to recover unpaid loan balances is secondary to lenders' primary line of business.

[2] In the context of national banks in the U.S., the term OREO is legally defined by the Office of the Comptroller of the Currency in regulations promulgated pursuant to 12 U.S.C.

The beneficiary will remove the liens and other debts on the home and try to resell it to the public, either through future auctions, direct marketing through a real estate broker, or by itself.

The asset manager may also try to contact REO realtors that specialize in certain ZIP codes to help sell this bank owned property.

Lenders may purchase "real estate owned" insurance to protect against loss and liability relating to lender-owned properties.