A more thorough explanation:

Definition: Real estate owned (REO) refers to property that a lender has acquired, usually through foreclosure, as a way to satisfy a debt.

Example: Let's say a homeowner took out a mortgage to buy a house but was unable to make the payments. The lender may foreclose on the property and take ownership of it. The property then becomes real estate owned by the lender.

Explanation: The example illustrates how a property can become real estate owned by a lender. When a borrower defaults on a mortgage, the lender can foreclose on the property and take ownership of it. The property then becomes an asset of the lender, which they can sell to recoup their losses.