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REO : Real Estate Owned Explained

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Real Estate Owned REO

Real estate that is protected by a mortgage or deed of trust might be foreclosed upon and sold to pay off debts. The foreclosure may be judicial or nonjudicial, depending on state legislation and the situation. In order for the lender to recuperate the money it gave to the defaulting borrower, the procedure is completed with the sale of the property . Like MG

The foreclosing bank may place a credit bid at the foreclosure sale up to the full amount of the debt plus foreclosure fees and costs. All other parties may only place cash or a cash equivalent bid, such as a cashier’s check. The bank will often place the highest bid at the foreclosure auction. The property becomes a “REO” if the bank is the successful bidder at the foreclosure sale. “Real Estate Owned” is referred to as REO. As well as MG Group Egypt

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Real Estate Owned Properties, What Happen To Them?

If a property is vacant after a foreclosure, the loan servicer will secure it and change the locks. Additionally, it will carry out any urgent maintenance. The servicer usually has an idea of the property’s condition and occupancy by the time the property is REO. (Once the loan is in default and throughout the foreclosure, the servicer demands periodic drive-by property inspections.)

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The property will then be advertised and sold to a new owner by the bank that foreclosed.

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REO Management Companies

Sometimes the servicer will work with a REO management firm to help with the property’s sale after a foreclosure. REO management firms often look after:

  • eviction services
  • redemption
  • property maintenance, including debris removal, repairs, and landscape services
  • market analysis
  • marketing services
  • title services
  • sales, and
  • closing services.

REO Property Is Occupied, What’s Next?

In order to get the renter or foreclosed homeowner to leave the property before starting an eviction process, the servicer or REO management business may offer a cash-for-keys agreement if the property is inhabited.

The Protecting Tenants at Foreclosure Act (PTFA) requires the following if a legitimate tenant occupies the property:

  • unless the buyer from the foreclosure auction plans to occupy the property as a primary residence or the lease is terminable at will or month to month, allows tenants to stay in REO property until the end of their lease,
  • extended notice periods are needed for tenants to leave the property.

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Additionally, several jurisdictions have expanded the notification requirements and the safeguards offered to tenants living in repossessed homes.

REO Property, How To Buy?

The servicer or REO management business will create a marketing plan for the property once it is vacant in order to sell it. The possible sales price is determined using an appraisal or a broker’s price opinion. Banks typically want to sell a property “as is.”

The asset manager and other management may need to review and approve your offer before it is accepted if it is for the purchase of a REO property. Additionally, a counteroffer could be made. The servicer or the REO management firm will arrange the closing, collection of funds, and title transfer after your offer is accepted.

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