Bank-owned foreclosures (REOs) are taking significantly longer to sell than foreclosures bought and resold by investors, extending the timeline for REO foreclosures even longer than the extraordinary delays for resulting from slower processing.
A study by Sean O’Toole of ForeclosureRadar found that third party investors are much faster at reselling foreclosures than banks, though the difference varies by area. In Oregon banks take an average 156 days longer to sell inventory than 3rd parties while in Washington it took banks only 52 days longer. California banks on average took 104 days longer than 3rd party investors; whereas Arizona and Nevada banks both took an average of 70 days longer to move inventory than 3rd party investors.
“Our statistics clearly show that real estate investors continue to far outperform banks in dealing with distressed properties,” says Sean O’Toole, CEO and Founder of ForeclosureRadar, “yet politicians and bureaucrats are putting pressure on banks to become landlords, which will hurt local economic activity, as fewer properties are made available to local investors, also impacting their Realtors, contractors, and property managers; as well as to home buyers in need of affordable housing.”
Foreclosure activity fell to a 44-month low in July as fewer homeowners default on their mortgages but banks continue to process foreclosures at an even slower rate, creating a form of extended Chinese water torture for housing markets.
A recent report from Lender Processing Services found that the average foreclosure now takes 587 days to process and resell.
Despite the downturn in overall foreclosure activity. lenders repossessed a total of 67,829 REO properties in July, a 1 percent decrease from the previous month and a 27 percent decrease from July 2010. The July REO total was 34 percent below the monthly peak of 102,134 bank repossessions in September 2010, RealtyTrac reported last week.