Current Housing Indicators |
| CURRENT | PREVIOUS | ||
| Existing Home Sales | 4.49m | ▼ | 4.74m |
| New Home Sales | 309,000 | ▼ | 344,000 |
| Housing Starts | 583,000 | ▲ | 477,000 |
| Building Permits | 547,000 | ▲ | 531,000 |
| HMI | 9 | UNCH | 9 |
| Existing Home Prices | $170,300 | ▼ (annually) | $199,800 |
| New Home Prices | $201,100 | ▼ (annually) | $232,400 |
More Videos
#DIANAOLICK ON TWITTER
- Robo-Deal Is All About Lowering Mortgage Principal
- As Mortgage Refinancings Surge, Banks Struggle
- Forty States Sign On to Foreclosure ‘Robo’ Settlement
- Running Robo-Settlement Numbers
- Own vs. Rent Riles Government Housing Policy
- Obama's Mortgage Refi Plan to Go Through FHA
- Housing Demand Defies Fundamentals
- US Treasury Forcing Mortgage Principal Forgiveness
- Robo-Reality: Final Foreclosures Fall as Pipeline Swells
- New Financial Crimes Unit Could Throw Wrench in ‘Robo’ Settlement
MOST SHARED
- Tesla Unveils First SUV: Model X
- China January Trade Surplus Soars as Imports Crumble
- Sony's Hirai to Extend PlayStation Strategy, Cut Costs
- China City Raises Cash Subsidies for Home Buyers
- India's Tata Steel Posts First Quarterly Loss in 2 Years
- Lightning Round: Yahoo!, CEC Entertainment, Standard Pacific and More
- Jobs You Can Do Forever
- Steelers' Antonio Brown Spends Super Bowl Week with Twitter Fan Turned BFF
- Alibaba Group Plans to Take Hong Kong Unit Private: Report
- How to Date a Wall Street Man
- New York Fashion Week Hits the Runway as Colors Pop
- Mulling Buffett's Stock Advice? Get in With REITs: Fund Managers
- LinkedIn Earnings Bode Well for Hiring and Social Media
- Top Five Mistakes to Avoid in Online Dating
- Victor Cruz ‘Understands’ Gisele's Super Bowl Frustrations
- Tamminen: The United States of India
- Unusual Volume: Taleo Jumps After Oracle's $1.9 Billion Offer
- Warren Buffett: Stocks Will Outperform Gold and Bonds .. and They're Safer 'By Far'
- So Now You Can’t Give Microsoft Away?
- The Secret Lives of Traders—Seeking the Next Hot Thing
- China January Trade Surplus Soars as Imports Crumble
- Strip Greenspan of His Knighthood: SocGen Strategist
- Markets Finally Get Greek Deal —So Where's the Rally?
- Warren Buffett: Stocks Will Outperform Gold and Bonds
- Alibaba Plans to Buy Back Yahoo Stake, Go Private
- Greece Deal Fails to Convince, EU Demands More
- 'Mortgage Deal from Hell' Hurts Sound Borrowers: Bove
- Clint Eastwood: Super Bowl Ad Endorses No One
RSS FEED
Realty Check
Text Size 
What's Really Behind The Spike In Bank Repossessions
 |
CNBC.com |
In a recent report on foreclosure filings from RealtyTrac.com, I noticed the number of bank repossessions was rising faster than overall foreclosure filings. Then, during an interview with the company's Rick Sharga, he said, "One of the reasons we've seen such a spike in bank repossessions is because of the huge increases in deeds in lieu of foreclosure, as homeowners are just mailing the keys back to the bank."
I've heard of deeds in lieu, but never really paid much attention to them, as I thought they were a very small subset of bank repo's.
A deed in lieu is essentially when the bank and the borrower agree that the bank will take title to the house as full compensation for the amount still owed on the mortgage. This is a negotiated settlement, and the bank has no recourse to go after the borrower. The borrower will take a credit hit, but not as bad as a foreclosure.
Why would a bank do it?
Well they didn't do it during the housing boom, because back then, with ever-rising prices, they could actually make money reselling a foreclosed property. Not so much anymore. Now they're taking a loss, not to mention the lengthy and expensive process of foreclosure. The bank has to go through all kinds of legal hoops in the foreclosure process, evict the tenant, and then run the risk that the tenant trashes the house. The deed in lieu is a tad more civil. More and more borrowers are doing it.
Why doesn't everyone do it?
Well, some borrowers think they can fight foreclosure, and with more and modification programs from banks, perhaps they can. Also, borrowers who can't get new or modified loans may choose the foreclosure route simply because it takes so much longer, so they can live rent-free longer. I'm hearing that a lot of banks that are offering borrowers the deed in lieu can't get the borrowers to call back.
It's kind of a sad commentary on the whole crisis, but perhaps, for some, it's a better option than fighting a fight that you can't win.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes
