Demand for Properties in Foreclosure Home List Rises
Real estate industry experts observed a new trend in auctions of properties in California’s foreclosure home list. Usually, when foreclosed properties are put on the auction block, majority of them go back to lenders. But now, investors are pushing their way into the forefront of foreclosure auctions in California.
Data released by ForeclosureRadar showed that foreclosure rate in California reached 13,550 last month, reflecting a 35 percent increase from the previous month which registered a 41 percent slide in repossession activities compared to February.
According to ForeclosureRadar founder Sean O’Toole, the rise in California’s foreclosure is due to the end of home repossession moratorium in March. The foreclosure moratorium was imposed by lenders during the last quarter of 2008 following the Obama Administration’s announcement of its foreclosure prevention programs.
The surge in foreclosures is evident in the increasing number of bank foreclosed properties for sale in the state’s foreclosure home list. More than 90 percent of foreclosures are bank owned or real estate owned properties.
For a brief background, when a bank foreclosed on a delinquent property, it will be sold by the county where it is located. At the auction, the bank usually makes its opening bid, the amount of which is higher than what investors were willing to pay. As such, majority of the properties go back to banks.
But a new trend is emerging. Last month, California courthouses saw about 1,627 foreclosed homes purchased by investors. The increase in the number of foreclosure purchases by investors was attributed to the lower starting bids offered by banks. And most of foreclosure homes sold at auctions were offered at discounted prices.
According to mortgage expert Mark Hanson, part of the reason why investors flocked to bank auctions are the end of foreclosure moratoriums and shortage of foreclosure-related products outside of courthouse auctions. Because of this, Hanson added, investors have no choice but to focus their buying activities on courthouse foreclosure auctions.
Meanwhile investor John Helmick said that in some counties in California banks have become aggressive and started dropping their opening bids. He pointed out that these counties registered a high percentage and number of properties in the foreclosed home list that were purchased by banks at lower prices.
