All Bank Repossessed Homes are Not Listed

By Bank Repossessed Homes are meant those residential units that have been taken over by the banks after completing the foreclosure process – this being the last stage of the procedure. The foreclosed houses are not selling in the auctions because of excess of supply and credit freeze. This has led to a staggering increase in bank repossessed homes. Unless this problem is tackled the housing market will not stabilize. To do so the federal government as well as many private bodies have come forward with remedial measures but so far no impact is visible. In the first quarter of 2009 there has been a record number of bank repossessed homes.

According to RealtyTrac there are 600,000 bank repossessed homes in the country that are yet to be disclosed. 80,000 of these hidden bank repossessed homes are in California. If these were openly listed then there would have been a further crash of prices leading to further chaos.

RealtyTrac founded its report by comparing the number of houses that have failed to make it at the auctions and the number of bank repossessed houses that have been disclosed. There is a considerable gap between the two figures leading to speculations about the missing houses. It is believed that in the Bay Area of San Francisco over 33% of the foreclosed units are kept under cover in ‘shadow inventories’. The latter term is used to refer to bank repossessed hoes that have not been listed by the banks. According to MDADataQuick the lenders repossessed 51,602 units including condos from January 2007 stretching up to February 2009 but only 30,823 have been posted in the listings.

The general practice is for banks posting their repo homes within a month or two after repurchasing the foreclosed units.

Tom Kelly representing Banking Corporation Chase avoided giving any direct reply when queried about the shadow inventories. He said that the banks were not at all eager to hold on to the repossessed houses but wanted to quickly dispose of them. It is this course alone that would help the banks avoid loss and make gains. Sean O’Toole the CEO of MDADataQuick says that there are 100 homes of California in the hiding list. 65.5% of the bank repossessed homes in the 18th month time period that ended on 31st January 2009 has been noted as resold by the banks in March.