A sheriff sale is often considered the last chance for a homeowner in trouble to rescue their house. Borrowers who have lost their home in foreclosure can show up and try to buy it back. But homeowners are scarce at sherriff sales. Instead transition. The regulars sit in the front row: representatives from financial companies like Deutsche Bank, Wells Fargo and JP Morgan Chase bid on the properties they once helped arrange financing for.
Claudia Coulton:We are finding that the homes are staying in the hands of lenders or their representatives for a much longer time than they ever have in the past.
Claudia Coulton is the director at the Center on Urban Poverty and Community Development at Case Western Reserve University. Her office has just finished looking at the flood of lender-owned homes in Cuyahoga County
Claudia Coulton:These institutions are not in the business of home owning and this leaves them vacant and they are difficult to manage and take care of and protect.
Looking at the numbers from 2000, Colton's office found that when financial institutions sold the homes they took back at sheriff's sale, they got back about 75% of what they paid for them. In 2007, though, lenders took big losses on real-estate-owned property around Cleveland. The median price lenders were willing to take for their Cuyahoga County homes was less than one-third of their previous market value.
Claudia Coulton:The market for homes that get into foreclosure is not working the way it used to. Homes are getting stalled in a place where they are not being used for people to live in, they are often vacant and then losing tremendous value in the next transaction.
But Coulton says, lender-owned homes in neighborhoods with fewer foreclosures tend to keep their resale value better than those in areas hit hard by foreclosure. Mhari Saito, 90.3.