Guide · Bank-owned (REO)

Bank-owned homes (REO): when nobody buys at the auction

REO stands for real estate owned. It is what a house becomes when nobody outbids the lender at the foreclosure auction, so the bank ends up owning it. If that was your home, a few things still matter.

Your state decides the deadlines. See them calculated from your own dates: Arizona · California · Florida · Georgia · Illinois · Indiana · Maryland · Massachusetts · Michigan · New Jersey · New York · North Carolina · Ohio · Pennsylvania · Tennessee · Texas · Virginia · Washington · all states

If you still live there

The bank now owns the house but it still has to follow your state's process to remove anyone living there, which usually means written notice and a court case. Only a sheriff or court officer can carry out a removal.

Banks often offer cash for keys: money to leave by a set date and leave the house clean. Get any offer in writing with the amount, the move out date and when you will be paid.

If you rent the house

A bona fide tenant can generally stay at least 90 days after written notice, and usually through the end of a genuine lease, under the federal Protecting Tenants at Foreclosure Act. Keep paying rent, and ask the bank in writing where to send it.

Money: surplus and shortfall

When the lender takes the house with its own bid, there is usually no surplus. Whether the bank can still come after you for the difference between the debt and the house value depends on your state. Some states bar it on a home, some cap it at fair market value, and some allow it with a deadline to sue.

Buying a bank-owned home

Lenders sell REO homes through real estate agents, often as is. Homes owned by HUD after an FHA foreclosure are listed on the HUD Home Store, with a first look period for buyers who will live in the home.

Common questions

What does REO mean?

Real estate owned. It is a home a lender owns after a foreclosure auction where nobody outbid the lender.

Can the bank change the locks right after it takes the house?

Not while someone lawfully lives there. It has to use the state possession process, which includes notice and usually a court order.

Can I still owe money after my house becomes REO?

It depends on your state. Check the deficiency rules on your state page.

You do not have to figure this out alone: a HUD-approved housing counselor is free on 1-800-569-4287. This page is general information, not legal advice.