What type of property is commonly referred to as Real Estate Owned (REO)?

Real Estate Owned (REO) refers specifically to properties that have been foreclosed upon and are now owned by the lender, usually a bank or government agency, after the foreclosure process has been completed. When a property goes into foreclosure, the lender takes possession of the property because the borrower has failed to make the required mortgage payments. The lender then tries to sell the property to recover its losses. This situation often occurs when the property does not sell at a foreclosure auction, and thus the lender retains ownership, classifying it as REO.

Properties held in a trust, those under construction, or properties simply listed on the market do not fit the definition of REO, as they are in different stages of ownership or development, and not directly associated with the foreclosure process.