Repossessed Houses Sold by Georgia Banks at a Faster Rate

Repossessed houses are being sold by banks in Georgia at a faster rate compared to the pace of sales over the past several months.

Billy Mayhew, CEO of Douglas County Bank, said that over the past several months, his bank has been drowning in unsold properties repossessed from home builders. But now, he said the situation has been improving. Slowly, his bank has been cutting down its foreclosure inventory.

While before his bank is able to sell only one foreclosed house for every three additional homes seized from defaulting home builders, now his team has been selling about four repossessed homes for every additional unit foreclosed and seized.

Mayhew believes that the planned November expiration of the federal tax credit pushed the increase in home sales and now he is glad that the tax credit scheme has been extended. Just like other bankers, he is hoping that another positive development in the housing sector would be able to help them sell their foreclosures when the tax credit finally expires.

Record numbers of repossessed houses in Georgia have significantly contributed to the collapse of a lot of banks in the state. Since last year, 28 banks have already failed, putting Georgia the top state in number of failed banks. Many of these banks provided huge loans to house builders and housing developers who defaulted and abandoned their housing projects when the crisis worsened.

Nevertheless, several analysts in Georgia have been contending that the state housing market is on its way to recovery, with the inventory of homes for sale dropping by 37 percent from last year to around 11,000 units, based on data from Metrostudy.

Eugene James, head of the Atlanta division of Metrostudy, affirmed the improvement in sales of foreclosure houses and other types of homes.

Mark Hancock, head of Private Bank, also expressed his optimism about the banking and housing sectors. He said his bank has been selling two foreclosed units for every additional unit being taken back. He added he is glad his bank has already sold off around 80 percent of its foreclosure portfolio, slowly eliminating toxic-asset problems.

Mayhew of Douglas County Bank said he has been selling a lot of homes priced in the $100,000 price range. He added that his bank has been losing because of the discounted prices, but lately, foreclosure prices have improved as his bank has been selling repossessed houses for around 90 percent of mortgage loan values.

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