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Real Estate Owned 

What is REO Property?

REO property is real estate that is currently owned by the government. These properties are classified in 
two categories, program and non-program. A program property is one that is eligible for financing under 
the section 502 program or one that can be reasonable repaired to be eligible. A non-program property 
is one that cannot be reasonably repaired or has been improved to a point that it will no longer qualify as 
modest under section 502 regulations.

Reservation of Program Property

  • Program properties are reserved for program eligible applicants and nonprofit organizations or public 
    bodies providing transitional housing during the first 60 days after the date of the first public notice 
    of sale, and during the first 30 days following any reduction in price or any other change in credit 
    terms or other sale terms. After the expiration of a reservation period, program properties can be 
    bought by any buyer.
  • An offer on a program property from a buyer who does not qualify for a section 502 loan may be 
    submitted during a reservation period, however, this offer will not be considered until the 
    reservation period ends.
  • No offer is considered until 4 business days after the date the property is offered for sale.

What Credit is Available?

Eligible Applicants (Program)

Credit is available for program eligible applicants on program properties. Loans are made for 33 years 
at the present interest rate of 6.0% (effective June 1, 2006). Payments are based on the total family income. Eligibility is also 
based on credit history, repayment ability, and the availability of other credit.

Non-Program Applicants

Properties that will be occupied by the purchaser can be financed for a term up to 30 years at the 
present interest rate of 6.5%.  Purchasers must pay a 2% downpayment.

Investors can obtain a loan for 10 years at the present interest rate of 6.5%. If more favorable terms 
are necessary to facilitate the sale, the loan may be amortized over a period of up to 20 years with 
payment in full due not later than 10 years from the date of closing.  
Purchasers must pay a 5% downpayment.

Other Credit Terms:

All non-program applicants (other than public bodies and nonprofit organizations) must pay a 
nonrefundable application fee of $100.

A down payment of 5% of the purchase price must be made on all NP properties.  Deed restrictions 
will be noted on the Quitclaim Deed indicating that the property is inadequate for residential occupancy.  
The restrictions will list the inadequate areas.

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Please send any comments or suggestions to:   craig.scroggs@ga.usda.gov

Last Updated : June 02, 2006