The disposition of vacant, lender-owned properties has become a key issue for community stakeholders, advocates, and municipalities concerned with the negative impacts of foreclosure-related blight on neighborhoods. These properties, commonly known as Real Estate Owned, or REO, are those that have completed the foreclosure process and have reverted to lender ownership. REO properties typically sit vacant and remain so until a lender sells the property to an owner who is able to put it back into productive use. Previous research by Woodstock Institute has illustrated the build-up of lender-owned properties in the Chicago region and quantified the impacts of foreclosures on communities in the form of declining property values and increased levels of violent crime. Other research has shown that foreclosures increase service burdens on municipal governments. Long-term vacancies tied to foreclosure are likely to exacerbate these negative impacts as the length of time a property remains vacant is correlated with an increased likelihood of vandalism and significant property deterioration. This report expands on Woodstock Institute's previous research on the foreclosure crisis to explore what happens to REO properties after they become lender-owned. Using data on foreclosure auctions and property transfers, this report examines the disposition of one-unit, single-family properties that became REO between 2005 and the first half of 2008. The report utilizes several key metrics to analyze the potential impact vacant REO properties have on neighborhoods: the percent of properties that became REO between January 1, 2005 and June 30, 2008 that were unsold as of December 31, 2008; the concentration of these properties in certain neighborhoods; the absorption rate of REO properties from the first quarters of 2006, 2007, and 2008; and the potential losses experienced by a lender based on value declines and the length of time a property sits on the market prior to sale. The report concludes with a set of recommendations focused on ensuring that properties that become vacant through foreclosure do not become blighted and further damage neighborhood housing markets.