Lenders Aren’t Moving REOs
In an earlier blog, I wrote about the inability of lenders that had completed foreclosures to timely put those homes back on the market. Under ordinary circumstances, a bank will put a “real estate owned” (or REO) home back on the market as soon as possible – often in 30 days. But only some of the many homes foreclosed on by the banks are being listed “for sale” in the Multiple Listing Service.
Real estate experts guessed that somewhere around 450,000 and 500,000 properties repossessed over the past year or so were not on the market. Fannie Mae and Freddie Mac confirmed last year that they were listing approximately 35 to 50% of the homes they own.
Recent reports from Fannie Mae appear to show a decrease in the number of foreclosed properties held. According to its most recent quarterly report, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year, and sold 89,691 REO properties during the same period. Looks like they are just about keeping up, right?
However, at the end of September 2009, Fannie Mae admitted that it still had 72,275 REO properties on its books, marking a 7% increase year-over-year numbers. So in reality in appears that this governmental related entity is falling behind in the processing and disposition of the homes it has acquired by foreclosure.
The delay in getting homes back in the system is especially apparent in localities where there are large numbers of “REOs” – such as our Phoenix/Scottsdale residential real estate market. And loans which end up foreclosed upon by small, non-Freddie Mac and Fannie Mae lenders are probably even more likely to be delayed due to their lack of adequate REO resources.
These time frames may increase due to the escalating rate of seriously delinquent single-family home loans. Fannie Mae’s monthly summary for November 2009 showed notable growth in seriously delinquent single-family home loans held or guaranteed by the company. Loans three or more months behind in payments or those in the foreclosure process soared to 4.98% in November 2009.
Obviously this increase will lead to more REO homes. And this also means that there will be continuing opportunities for buyers to purchase homes for cheap. If you are interested in exploring a purchase of a foreclosed home, let us know at www.simplysoldaz.com to contact us or for more info.
– N. Mark Kramoltz © 2015