Properties that are taken into a bank's inventory, after a foreclosure sale. Bank-owned property is acquired by a financial institution when a homeowner does not make their mortgage payments. These properties then sell at a discounted price, much lower than current home prices. Also referred to as REO (real estate owned) property.
This type of property is taken back by lenders during foreclosure. Lenders and banks with the highest bid in a foreclosure gain the rights to obtain the property. Bank-owned properties tend to have low interest rates and low down payments. They can be found through an online service, or directly through lenders. Large national lending institutions have departments called loss mitigation departments, that sell these properties.