Learn about bank-owned properties.
The term foreclosure is the legal procedure used by a bank to recoup the amount lent to a home buyer who defaulted on a loan.
At the completion of this process, the bank will take ownership of the home and make it available for sale.
An REO is a term used to describe a bank-owned property. It stands for, Real Estate Owned. A property becomes an REO when the lender has foreclosed on the previous owner and has taken ownership of the property. However, it’s common for the term foreclosure, to refer to bank-owned homes.
A government foreclosure is a property that had an FHA insured loan that was defaulted on.
Now, rather than the bank taking back the property, the government takes ownership, where it then becomes a HUD-owned Home.
The Department of Veteran Affairs, similar to HUD, foreclosed on the property that was purchased with a VA secured loan.
Since the loans are guaranteed by the federal government, the lender receives a full refund of the lost money. The property is then sold by the Department of Veteran Affairs.