DEFINITION of 'Other Real Estate Owned - OREO'

In bank accounting, this term refers to real property owned by a banking institution which is not directly related to its business. In balance sheet terms, other real estate owned (OREO) assets are considered non-earning assets for purposes of regulatory accounting.

BREAKING DOWN 'Other Real Estate Owned - OREO'

Other real estate owned is most frequently a result of foreclosure on real property as a result of default by the borrower who used the property as collateral for the loan. Most items in this category are available for sale. A growth in OREO is indicative of deteriorating credit for the bank with non-earning assets that are growing.

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