What will banks do with foreclosure properties?
Ever since the collapse of the housing market a few years ago, banks have been foreclosing on properties left and right. In today’s news, Yahoo is reporting that US homes foreclosures are up 25 percent since last August. What this means is that lenders took back more homes in August than at any other time since the housing market crash!
Last month the number of foreclosed properties reached almost 100,000. It is understandable that banks do not want people living in homes if the tenants are not paying the mortgage. This leads to another question though; what are the banks going to do with all the foreclosure properties? Are they expecting the market to pick up in the near future? Do they have other plans to take care of the properties instead of allowing them to sit idle and possibly need fixtures later?
Getting in at the right time
After the dot-com bubble, people needed another place to invest. The logical thing to do was put it all in into real estate. Ever since then, prices of homes and related properties rose significantly until the year 2008. Market caught up with the inflated numbers (along with some securities and derivatives frauds) and people soon found themselves in a lot of trouble.
The people that got into the real estate market at the right time made a lot of money. They invested wisely and got out when the going was good. Generally by the time news about a good investment trickles down to the common person, it is already too late to jump on the bandwagon. Many heard that it was a great time to buy properties as an investment right before the market crash and acted upon it. Now those people have been getting their properties foreclosed on left and right.
What do the banks plan to do with such properties?
Instead of telling the tenants to leave, some banks realized that it was beneficial for both parties if the house was not empty due to eviction. This saves on maintenance and fixture costs the banks would have to pay out of their own pockets. Now all of a sudden the same tenants are being told to evict their homes.
Banks know that there are no buyers out there, or at least not in the same quantity that they would like. So why are they forcing people to leave now all of a sudden?
This is pure speculation, but it could be possible.
Given the condition of the worsening economy, everyone is worried. This includes the Government and almost every person living in the United States. The Fed has said that they will take off bad debts from the books of banks and other lenders if there is a need. Banks are possibly preparing themselves to be relieved by showing the Fed how much bad debts expense is written in their books.
If the Fed does take such steps towards helping the economy, banks are going to be getting billions of dollars. I believe this is the reason evictions rates are going up currently.
No matter which way the economy goes, big corporations always find a way to profit from it. The only people that suffer are the taxpayers.