Many need substantial investment to restore
By George C. Ford, The Gazette
The number of Iowa homes in foreclosure owned by banks soared 237 percent in April from the same month in 2013, as the markets continue to work through the aftermath of the economic recession and catastrophic events such as the 2008 flood in Cedar Rapids.
RealtyTrac, an Irvine, Calif., company that collects and tracks housing data, said 347 Cedar Rapids properties were in some stage of foreclosure last month — default, auction or bank owned.
The number of properties placed in foreclosure rose 3 percent in April from the previous month and was 30 percent higher than the same time last year.
Many — but not all — of the Cedar Rapids homes in foreclosure are located in northwest and southwest areas of Cedar Rapids, according to a RealtyTrac database, where the 2008 flood left many homeowners owing more than their damaged property was worth.
Houses owned by banks accounted for 39.3 percent of all Cedar Rapids properties in foreclosure in April. RealtyTrac data showed 147 properties were valued at less than $200,000, and 134 were built before 1950.
Similar foreclosure trends were found in other Iowa communities, including Davenport, Des Moines and Waterloo. Bank-owned real estate as a percentage of all homes in foreclosure topped 50 percent in Waterloo.
Banks typically end up owning real estate after an unsuccessful foreclosure auction. In many cases, the property either fails to attract what the lender will accept as a minimum bid based on the amount of the mortgage in default.
Daren Blomquist, vice president of RealtyTrac, said many of the properties held by banks — primarily large regional or national lenders — are what is left after more desirable homes have been sold.
“Many of these bank-owned homes are bottom-of-the-barrel properties in terms of location or condition,” Blomquist said, “They will provide some much-wanted inventory of homes for sale in some markets in the coming months.
“Investors and other buyers willing to do more extensive rehab will likely be best-suited for these properties.”
While large banks and the federally controlled Fannie Mae and Freddie Mac are carrying more repossessed homes on their books, Iowa’s 320 community banks are seeing just the opposite.
As a percent of assets, other real estate owned (OREO) by Iowa community banks is down from 0.23 percent on March 31, 2013, to 0.16 percent on March 31 of this year, according data from the Federal Deposit Insurance Corp.
“The average assets for Iowa banks is $68 million,” said Chris Lindell, president and chief executive officer of Guaranty Bank and Trust in Cedar Rapids. “That means on average, every bank in Iowa has $108,800 of OREO, compared with $156,400 a year ago.”
Lindell said regulators prefer that banks sell repossessed homes and properties as quickly as possible.
“They don’t want to see OREOs on a bank’s books for any length of time,” Lindell said. “They would have a pretty jaundiced eye if you held onto anything for more than a couple of years.”
Blomquist and Lindell said there are investors who seek out repossessed houses. Lindell said Guaranty Bank works through local real estate agents to sell repossessed homes and property,
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