Repo homes or repossessed homes are those residential units that have taken over by the lenders, mainly the banks, after having foreclosed upon them. Repo homes are also referred to as REO or real estate owned. There is now hardly anybody today who does not know about repossessed homes as these are dotting the landscape. The banks are sitting with so many repo houses, that they are offering huge discounts to take them off their inventory. But buyers are at a premium and so repo homes continue to languish – blight on neighbourhoods.
In the first quarter of 2009 the threat of foreclosures that would ultimately lead to repo homes increased by 24%. It is set to spike further if the jumbo lenders discontinue their moratorium and start taking action.
President Obama as optimistic plans about helping 9 million homeowners but the big question mark is whether the banks will cooperate despite carrots calculating to $ 75 billion being offered to them.
The increase in number of repossessed homes is causing the housing crisis to worsen. Across the country about 804,000 borrowers got one foreclosure related notice during the first quarter of 2009. Last year during the same period the number was 650,000 according to RealtyTrac.
In March 340,000 properties were scarred showing an increase of 17% from February and 46% from March 2008. Foreclosures seem to have come back with a vengeance after a brief respite of few months.
In 2009 there were 191,000 repo homes – houses taken over by the banks after completion of foreclosure process. The number of repossessed houses in the first quarter of this year was 13% less than that of the 4th quarter of 2008. There are fears that it will continue to increase through summer before tapering off.
Fannie Mae and Freddie Mac together with other big financial bodies and banks had temporarily put on hold foreclosures waiting for news of Obama’s measures. Now they are jumping in to add to their list of repo homes those units that have no hope of being included in the assistance plan. Contracts have been signed between the Treasury Department and six important loan servicing entities like Citigrpup, Wells Fargo, JPMorgan Chase and others to take part in a plan named Making Home Affordable.
Shaun Donovan of HUD commented that in the forthcoming months there will be more Repo homes – as lenders will foreclose and take over those units that have been deserted by speculators.
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