As Home Prices Rebound, Lenders Rush to Unload REOs
The recovery in home prices this year is prompting banks to sell off their REO inventory at a brisker pace. Sales of bank-owned homes made up 10 percent of residential sales in November, the third consecutive month for increases in REO sales, RealtyTrac reports.
"Lenders are taking advantage of this environment to unload more of their bank-owned inventory and in-foreclosure inventory at the foreclosure auction," says RealtyTrac's Daren Blomquist. "But as the backlog of distressed inventory available dries up in many of the markets with the most efficient foreclosure processes — namely California, Arizona, and Nevada, with Georgia not far behind — overall sales volume is declining and will continue to do so until more nondistressed sellers enter the market."
Rick Sharga, executive vice president at Auction.com, says his company is “seeing more properties sold at trustee sales, and we are seeing more properties that are coming from servicers priced to sell at trustee sales.”
Previously, mortgage servicers would put foreclosed homes up for sale at the full value of the loan, CNBC reports. However, those homes would often land back at the bank as investors sought larger discounts. “Ironically, as prices are rising, servicers are discounting the homes more,” CNBC reports.
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Source: “Sales of bank-owned homes surge,” CNBC (Dec. 20, 2013)