What does 'Real Estate Owned (REO) property' refer to?

Real Estate Owned (REO) property refers specifically to properties that have been foreclosed upon and are now owned by a lender, typically a bank. Once a property goes through the foreclosure process and no buyer is found at the foreclosure auction, the lender takes possession of the property and it becomes REO. This designation means the bank is now responsible for managing, maintaining, and trying to sell the property to recover the loan amount.

The other options describe different scenarios related to property ownership or management. Properties currently on the market could be owned by anyone, not necessarily banks. Rental properties might belong to private individuals, companies, or banks but are not categorized as REO unless they were owned by a lender after foreclosure. Lastly, while a government can own real estate, it does not fall under the definition of REO unless they specifically acquire properties through foreclosure processes. Thus, the definition of REO is distinct and specifically pertains to properties that revert to bank ownership following a foreclosure.