| Since banks and mortgage companies began making | | | | consumer or even a group of investors can work with |
| loans for people to purchase their homes and | | | | one of these REO companies to find out about any |
| properties there has also been the need for the | | | | relevant listings in their price range, or which ones might |
| foreclosure process. Even people who enter into a | | | | be a good match to their needs. |
| loan with the full intention of repaying it in full might run | | | | Interestingly enough many people believe that the |
| into difficulty and be entirely unable to pay their | | | | market for such properties must be remarkably |
| mortgage. | | | | competitive, but the reality is that most REO homes or |
| This is a lengthy and difficult process through which the | | | | properties end up being listed at their actual market |
| lender makes their claim on the property used to | | | | value. This does not mean that they are over-priced, |
| secure the loan. Usually they will do everything possible | | | | however, because the subprime market collapse and |
| to retain the standing loan and to allow the buyers to | | | | the many problems in the global real estate industry |
| remain in their home. If this fails they might seek to sell | | | | have driven prices down into a far more realistic range. |
| the property in a real estate auction (with a minimum | | | | This translates to big savings for those who are willing |
| amount that is equal to the total due on the loan), and if | | | | to work with the REO companies who are marketing |
| this fails they foreclose and reclaim the home. | | | | and selling such properties. |
| Once this terrible process is over and done with, the | | | | There are a few things to remember before jumping |
| buyer or borrower must vacate the premises and the | | | | into the process, however, and the first has to do with |
| bank or mortgage company has full ownership of the | | | | money. Some REO listings are not in a condition |
| property. Because a bank or mortgage company is | | | | suitable to receive traditional financing. For instance, |
| not designed to provide lawn and home maintenance | | | | some are sold "as is", which allows the bank to legally |
| or to perform regular repairs they tend to seek out | | | | sell the house regardless of its knowledge about |
| qualified groups to help them with assets such as | | | | problems of all kinds with it. Of course, that doesn't |
| these. The groups are usually known as REO | | | | mean that all "as is" properties are in need of repair, |
| companies, and they will provide upkeep and the staff | | | | but it does mean that a traditional lender may frown on |
| to help the bank sell the home or property at the | | | | providing financing for such a purchase. |
| market value. | | | | On the other hand, many banks that own the |
| Unfortunately, the past few years have seen a | | | | properties are more than willing to extend favorable |
| marked increase in the frequency of the foreclosure | | | | terms to anyone willing to buy one of their REO listings. |
| process, and so there are now hundreds of these | | | | This means that REO companies are a great way to |
| REO companies actively helping financial institutions to | | | | enjoy a wide number of choices, but that an inspection |
| manage and sell foreclosed assets. A regular | | | | may be necessary before signing a contract. |