Industry NewsMarkets & Economy

Banks to unleash flood of REOs

Part I: Impact on inventories lags foreclosures
Published on Jan 26, 2009

Editor's note: This is the first installment in a two-part series that focuses on the waves of foreclosed, bank-owned properties (also known as real estate-owned properties or REOs) that will hit the for-sale market, and the plans and pitfalls for reducing this inventory. Click here to read Part II. Inventories of unsold homes are likely to swell in coming months as lenders begin to push a growing backlog of repossessed homes up for sale -- often in communities already awash in distressed properties.While builders have cut back drastically on the production of new homes (see story), it's likely lenders will soon be putting pressure on inventories even if they succeed in efforts to keep more troubled borrowers in their homes rather than foreclosing on them.Because it can take weeks or months for lenders to put repossessed homes on the market, the impact of real estate-owned (REO) properties on inventories lags behind foreclosures. Government efforts to recapitalize banks through the Tro...

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