If you are house shopping, you may want to look at buying a foreclosed home, also called a real estate owned (REO) property. An REO home is owned by the loan company as a result of the past owner defaulting on the loan. This is also called a foreclosure property or simply a bank-owned property. How might a foreclosure on a house proceed? If the property doesnt sell, the lender will hold onto the home, which is known as real estate-owned, and REO. Throughout most of the foreclosure process, until 5 days before the public auction date, you will be in a reinstatement period. You could make all your past payments in full along with penalties.