Some of you may have heard recent reports that existing home sales are up. You also may have heard that the Federal Reserve chairman announced, “The Recession is Over…”. But, it may be a “jobless recovery”. OK, sure. That reminds me of the thinking that my 10-year old nephew exhibited when he saw a billboard for the citywide strongman competition, and he confidently announced, “I am going to enter that and win!”. (He always was an extremely confident boy!).
The “recession” may be “over”, but the volume of bank owned foreclosures has increased dramatically. There were efforts in the early part of 2009, encouraged by the administration, to postpone many foreclosures and attempt workouts for delinquent borrowers. But those have been minimal, at best.
So, what does all this mean? Plenty of bank-owned foreclosures are in the pipeline, ready to hit the market. Not good news for your property value, if you are in a neighborhood that had a huge runup in prices from ‘04-’07.
Fannie Mae and Freddie Mac recently announced that they collectively have over 100,000 homes that they need to sell, a number that has doubled over last year.
Here is a quote from Fannie Mae’s announcement (keep in mind that REO=Bank-Owned Home):
“While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended…”
Clear as mud, right? Well, in plain english, they have been postponing the inevitable, and now the chicken has come home to roost (or however that saying goes…).
Here is link to that article on Fannie Mae Foreclosure data.
If you need a refresher, Fannie Mae and Freddie Mac are nicknames for pseudo-government organizations that were founded to purchase loans from banks, in order to free up money so that those banks can make new loans (Banks are required by law to have a certain amount of cash reserves on hand, just in case).
What does all this mean? Just be on the lookout for more bank owned foreclosures coming. Even though most will probably be in Nevada, California, and Florida, we will see our fair share here in Columbus and Central Ohio.
(Photo Credit: 8 Mile Rd House by swainboat, via Flickr)













