Let the Banker Beware – Top Ten Issues for Selling REO


As the philosopher Yogi Berra famously said, “Its déjà vu all over again.” Or so it is for those of us who lived thru the last great real estate downturn in the late 1980s and early 1990s.

As the current real estate cycle continues its downward spiral, banks are once again reluctantly becoming owners of real estate. Most banks want to sell their REO as promptly as possible. In so doing, however, they become sellers of real estate, rather than lenders on real estate. This means that the underlying legal documentation moves from loan documents (with which banks are familiar) to contracts of sale (with which they are probably less familiar). While real estate contracts often appear simple and straight forward, there are a number of more subtle issues that banks need to be aware of when they enter into contracts to sell their REO. With apologies to David Letterman, here is a list of what I consider the top ten REO seller issues.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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