Banks accept 66% of debt value at foreclosure auctions
June 17th, 2009, 12:05 am · 4 Comments · posted by Mathew Padilla
Banks on average were willing to take a 34% discount against the first mortgage on an Orange County property at foreclosures auctions, known as trustee's sales, last month, ForeclosureRadar.com reported yesterday.
Although the discount was up from 32% in April and 23% in May 2008, it has been mostly flat this year. The average discount shot up early last year as foreclosures mounted. During the housing boom, banks generally did not offer discounts.
Investors buy a small portion of homes auctioned at trustee's sales in Orange County despite the hefty discount. There are several reasons:
- Even with the discount, the bank may still be asking more than a property will fetch if an investor quickly resells it - especially including costs to prepare it for resale.
- An investor may have to evict the former homeowner.
- There could be property damage. Properties are sold "as is" at auctions.
To see my previous post on ForeclosureRadar showing a plateau in foreclosure filings, CLICK HERE.
And read about California's 90-day foreclosure moratorium HERE.
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