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What is REO?

Foreclosed homes are often referred to as REO which stands for "Real Estate Owned" meaning the bank now owns the property.

What is the foreclosure process?

 When you borrow money to purchase a home, the lender (Mortgagee) records the mortgage as a lien on the property.  Essentially, they hold an interest in the property during the life of the loan until the mortgage is paid in full.  Within the mortgage documents that are signed when closing on a home, there is a "Notice of Acceleration Clause".  This allows the lender to call the debt due immediately for a number of reasons--most commonly for a lack of payment by the borrower (Morgagor).  There are other actions that can activate this clause like unpaid taxes, destruction of property etc. 

What is the Foreclosure Process?

0. Default on the mortgage payment
0. Forbearance Period:  Two or more payments are missed and the Loan file is transferred from the loan servicing department of pre-foreclosure department.
0. Loss mitigation:  The bank contacts the home owner to determine the cause of being late and if circumstances indicate whether this will improve--will the mortgagor be able to become current in the near future
0. Foreclosure Sale:  See Short Sales for more information on this process
0. Redemption:  6 months from the sherriff's auction of a home and, in some cases for farms and large pieces of land, it can be 12 months.
0. Lender receives marketable Title and can now list the property with a realtor and sell it.