READ this story and many more on the industry at www.preservationmonthly.com1,750 Bank Owned Properties Represent increase in NYC REO InventoryA study by the Furman Center for Real Estate & Urban Policy found a rise in bank-owned inventory over the last three years, 290 properties in December 2006 to 1,750 in September 2009.“If we can identify what kinds of properties are likely to end up as [bank-owned], where they are located, and what their effects are on the surrounding neighborhoods, foreclosure response efforts can be better targeted at the neighborhoods that need them most,” said Vicki Been, faculty director of the Furman Center.15 Years of Data Reveals That Most NYC Properties That Enter Foreclosure Never Complete the Foreclosure Process Because the Homeowner Either Sells or Becomes Current on Their Loan. Of Those That Do Complete the Foreclosure Process and End.Yet little is known about what happens to these properties after they receive a filing. How many homeowners manage to stay in the same home? How many sell? How many properties complete the foreclosure process and go to auction? How many end up bank-owned (termed Real Estate Owned or “REO” by lenders)?The number of REOs in the city remains small when compared to harder-hit areas of the country, but the report finds bank-owned properties are highly concentrated in the eastern Queens, central Brooklyn and north shore of Staten Island neighborhoods that have been hurt most by the mortgage crisis.The highest number by far is in Queens, which is home to 1,072 REOs. Brooklyn has 245 and Staten Island has 226. Nearly 20% of all 2007 foreclosure filings in Queens wound up as REOs, the highest rate in the city.“Understanding the life cycle of foreclosed properties in the city is crucial to developing effective public policies to stabilize neighborhoods and families, and this analysis is an important first step” said Vicki Been, faculty director of the Furman Center.Among the approximately 12,000 one-to-four family homes that were hit with foreclosure notices in 2007, 54% were never sold and had not completed the process by September 2009. Almost 14% had not been sold, but had received another foreclosure filing. Some 14% were sold and another 4% transferred through divorce or estate sales. Another 12% went to auction, but were not sold, ending up as REOs.The report also reveals a long history of “flipping” REO properties, whereby homes bought out of REO are resold within a year. Between 1995 and 2007, 44% of properties that sold out of REO were resold within one year. Flipping activity peaked in 1998, when 55% of REO sales resold within a year. This decreased to 37% in 2006, and 32% by 2007. Between 1995 and 2007, properties flipped within a year resold at an average price increase of 45% more than their purchase price less than a year before.“These figures on rapid re-sales are significant, but without more information on what kind of renovations are taking place in these properties, it’s hard to know what to take away here.” commented Ingrid Gould Ellen, co-faculty director of the Furman Center. “On the one hand, if irresponsible investors are doing minimal renovations to distressed properties before reselling them, this will likely create problems for future owners and neighbors. On the other hand, if investors are acquiring otherwise undesirable properties, rehabilitating them and returning them to stable occupancy, then this may have a positive effect on the neighborhood.”See REPORT in Full go to http://www.preservationmonthly.com/story_2010_31.htm
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