Many Lenders Delay Adding Properties on Repo Homes Listings
The abundance of properties on repo homes listings has forced some lenders to delay foreclosure on delinquent houses. Some lenders are still filing for repossession, but industry experts said that some are avoiding foreclosing on delinquent properties.
This is because property values continue to decline and lenders have learned that placing properties on repo homes listings and reselling them do not help in recovering their losses.
In fact, foreclosing on delinquent properties can be costly to lenders because they will be responsible for paying the insurance, taxes and code enforcement fines.
Jacksonville Area Legal Aid agency lawyer April Charney said that some lenders are canceling foreclosure auctions or dismissing cases after they have realized that a home is worth way below its market value.
She said that some of these cases her agency have litigated for years, adding that she is getting an average of two case dismissals per week.
Real estate experts pointed out that properties on repo homes listings have become so cheap that some lenders know that flooding the market with more foreclosed homes would only pull down prices further.
Charney said that if a foreclosed house does not sell at an auction, it will become another empty property in the community where it will pull down prices of surrounding houses in the neighborhood and become magnet to thieves and vagrants.
Attorney Ralph Fisher observes that lenders are now ignoring troubled homeowners, refusing to make contact with them. This leaves family in limbo about what will happen to them and their properties.
Industry experts believe that the reluctance of lenders to foreclose on delinquent properties does not improve the predicament of distressed homeowners. When the title of a delinquent property is on the precipice of foreclosure, the homeowner could not refinance or sell.
Meanwhile, Lisa Pride of the Hillsborough County Circuit Court foreclosure division in Florida said that so far, there are 3,874 repossession auctions scheduled this year, but only 2,021 have pushed through. The rest either the plaintiff’s lawyer failed to show up or the auction was cancelled.
Lawyer Timothy Kingcade said that another reason for delayed foreclosure is the lack of resources to file all the cases in court in a timely manner.
And data showed that more and more lenders are avoiding placing properties located in lower-income areas on repo homes listings because of the drastic drop in housing prices.
