Friday, August 22, 2008
One of the venues where real estate buyers and investors can grab the chance to enjoy considerable savings is at foreclosure auctions. Most of the time, lenders are able to unload their inventory of foreclosed properties in these auctions with very good outcome. But lately, things have not been going well for many lenders as the number of repossessed properties end up reverting to their lenders has increased considerably.
According to a report published by the Woodstock Institute, the number of Chicago foreclosure filings that ends up in auctions has actually risen by 98 percent from 2006 to 2007. The sudden growth in inventory without the increase in demand will certainly mean that most of these distressed homes will remain unsold during the foreclosure auction. In fact, by 2007, 94 percent of the Chicago properties sold at auctions are reverted to the lender.
For most lenders, this is a big problem especially with the costs incurred in keeping these foreclosed homes. Aside from this, Chicago communities and neighborhoods are worried that the abandoned houses will only attract undesirable individuals such as vandals and burglars. Not to mention the fact that they can be eyesores, driving down home values of neighboring properties.
Many lenders are also ill-equipped to deal with their growing inventory of foreclosure homes, making it even more difficult for them to provide care and maintenance.
Of course, not all distressed homes end up in the foreclosure auction block. Some of them are sold via a short sale transaction while others are redeemed by the original owner via a new mortgage repayment plan or loan modification program.
Local officials are urging both lenders and homeowners to work out a deal in order to avoid foreclosure filing. Both parties will surely benefit from a successful negotiation as well as the community
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