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Obstacles delay REO sales

Part II: Banks to unleash flood of REOs

Editor's note: This is the second 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. Part one included a discussion of the effectiveness of foreclosure prevention programs and government attempts to recapitalize lenders. While the government's efforts to keep lenders solvent may have allowed them to hold off on selling some properties at fire-sale prices in 2008 (see part one), real estate brokers and auctioneers expect REOs to be big business in many markets this year. FDIC-insured banks had $23 billion of REO inventory on their books at the end of September -- a 134 percent increase from a year ago. That includes $11.5 billion in one- to four-family homes and $1.5 billion in property purchased with FHA-backed loans securitized by Ginnie Mae. According to the latest quarterly report from ...