What Banks Are Really Doing With Foreclosures, Pt 2
First let me just say that I'm really impressed with the discussion that followed yesterday's blog on what banks are doing with foreclosed properties.
Secondly let me say that this has been perhaps the most mind-bogglingly frustrating story on which I've ever worked.
For months now I've been hearing claims from people in and out of the real estate industry that banks are manipulating not only the housing market but also their balance sheets by holding on to foreclosed properties.
I have asked the banks directly, and you saw the result in the postfrom Bank of America yesterday (and let me just say that I posted it because as a reporter, that's my job. I didn't post it as the gospel truth. That's what I'm seeking. Oh, and while we're at it, I know that every data report is reported by someone with some skin in the game somewhere, so no, believe it or not, I am not a shill for any industry. You try doing this for one day, and get back to me). I've asked B of A to respond to all of your comments yesterday, and they said they stand by their statement that they do not hold on to REOs.
What I have found is that the foreclosure process is so convoluted, differing from state to state, and the reporting of said foreclosures is so differentiated, depending on what source you look at, that while I do believe foreclosures are at a record high, neither I, nor any of the experts with whom I've had endless conversations, can tell me exactly what any of this really means on the ground level.
Yes, there are vacant properties out there in some stage of foreclosure. Yes there are empty foreclosed, bank-owned homes that do not appear to be listed for sale anywhere. Yes, there are people still living in foreclosed homes. Yes there are homes where the mortgage is many many months delinquent, and the owners have yet to receive a foreclosure notice. Yes there are people who thought the bank had foreclosed, moved out, and now find they are still the owners of the home and liable for the various tax and municipal charges on the home.
Today I received yet another in the now tidal wave of housing reports that I get daily. This one from the "Hope Now Alliance." You may remember this predates the Obama administration's rescue plan. It is a coalition of lenders brought together by former Treasury Secretary Henry Paulson.
I know, looks like a lot going on, right?
Well what struck me is the wide difference in "foreclosure starts" versus "foreclosure sales." Understand that "foreclosure sales" are not banks selling REOs but the actual sale of the foreclosed property back to the bank.
In any case, you see all the numbers going up.
The difference in starts versus sales is that many of those starts are turning into workouts and not ending up in the final sale, ie the loss of the home. Hope Now'sdirector, Faith Schwartz tells me she is heartened by the number of workouts, but she admits the starts continue to rise, and that inevitably means more homes will be lost because not everyone qualifies for a workout.
As for my question of how many of those final sales, or bank REOs are getting out onto the market and how quickly, she didn't know either.
On CNBC.com now:
- Slideshow: 10 Most Affordable Metro Areas
- Slideshow: 10 Highest Homeowner Vacancy Rates
- Slideshow: 10 Most Popular Relocation Cities
Questions? Comments? RealtyCheck@cnbc.com