Experts see bank-owned homes returning to market in Southwest Florida

In this file photo taken July 21, 2010, a 'bank owned' sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif. Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

AP Photo/ Reed Saxon, file

In this file photo taken July 21, 2010, a "bank owned" sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif. Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

For-sale signs: With such a backlog of foreclosures and the market trying to rebound, how many will be in yards? And how far will the prices plummet to make them disappear? NDN file photo

For-sale signs: With such a backlog of foreclosures and the market trying to rebound, how many will be in yards? And how far will the prices plummet to make them disappear? NDN file photo

— Bank-owned homes are back on the market.

Real estate experts say banks aren’t holding on to foreclosed homes like they used to in Florida.

John Tuccillo, chief economist for Florida Realtors, told those attending the recent Naples Area Board of Realtors’ annual economic summit that banks aren’t holding on to foreclosed, bank-owned homes as some analysts are saying.

Even some experts who long held that belief have updated their opinions.

“They aren’t holding on to them anymore,” said Jack McCabe, a Deerfield Beach-based real estate analyst and CEO of McCabe Research & Consulting LLC, who for about 18 months had been saying that banks were holding on to foreclosed homes for a variety of reasons.

“Banks have revved up foreclosure filings and sales since settling two major lawsuits with state attorney generals in 2012,” McCabe said.

McCabe said banks began changing their approach late last year and have been selling homes primarily to high-net-worth investors, with the ability to pay cash rather than needing financing.

“The banks never intended to be landlords,” McCabe said. “We are going to continue to see hedge funds, corporate buyers and high-net-worth investors continue to accumulate America’s real estate.”

One measure for the trend is real estate owned properties — or REOs — hitting the market after a lender acquired them, such as through foreclosure.

In March, there were 162 new REOs in Collier County, up nearly 40 percent from the 116 in that month in 2012, RealtyTrac’s records show. In March 2009, there were 386 — the most seen in the county since the foreclosure crisis hit.

Lee County had 196 such real estate properties in March, down about 60 percent from 498 in 2012, according to RealtyTrac’s records. The most REOs seen in Lee since the foreclosure crisis hit were 1,539 in April 2009.

“I find absolutely no evidence that they are holding anything back,” Jeff Tumbarello, director of the Southwest Florida Real Estate Investment Association said of lenders. “I just see a cumbersome system.”

In Lee County, distressed sales make up about 20 percent of the market, while 80 percent are traditional sales, Tumbarello said.

“There are a lot of reasons to draw the conclusion that the worst is behind us,” Tumbarello said.

Brenda Fioretti, NABOR’s media relations committee member and a managing broker for Prudential Florida Realty in Naples, said distressed property activity has declined tremendously.

“We are currently seeing a bigger decline than the estimate as Naples can sometimes lead other parts of the country,” Fioretti said. “This area is at the lowest level of distressed homes since NABOR began tracking it in July 2009.”

Brenda Fioretti, Naples Board of Realtors, on NewsMakers 8-26-12.

Brenda Fioretti, Naples Board of Realtors, on NewsMakers 8-26-12.

In March, NABOR reported that traditional sales were 84 percent of homes sold and distressed sales were 16 percent of homes sold, compared to August 2010 when 66 percent of homes sold were distressed.

Mark Vitner, a managing director and senior economist at Wells Fargo, said there are various issues surrounding the foreclosure process and sale of those homes.

“Most banks, particularly the larger ones, would like to sell foreclosed property as soon as they can,” Vitner wrote in an email. “The sales typically result in a loss but also free up capital that can be redeployed into new loans.”

That approach may not work for some smaller banks, which are holding mortgages on their books at a higher value that they could sell the underlying property for and are reluctant to sell too many homes because the loss would overwhelm their finances, he said.

“These two issues are likely the source of all the tales that banks are holding onto properties and waiting for higher prices before they sell,” Vitner wrote in an email. “While there is some truth to this story, the issue is not as straightforward as it might seem.”

JPMorgan Chase & Co. officials say the number of listings the lender has is comparable to a year ago.

“Our listings have remained flat versus a year ago,” said Maribel Ferrer, Chase spokeswoman, in an email. “One thing that is happening is homes are being snapped up more quickly once they hit the market because we see the housing market recovering.”

Chase is noticing the trend in growing consumer confidence.

“In fact, our new loans/originations in Florida have grown significantly and I think there is a great story in the turnaround of the market,” she said.

At a Southwest Florida community bank, Gary Tice, chairman and CEO of First National Bank of the Gulf Coast, said as soon as it gets a foreclosed property, the bank wants to sell it.

“I don’t know of anyone that wants to hold on to foreclosed properties,” Tice said. “We would rather have the cash, whatever the cash is, to put it to use.”

First National Bank of the Gulf Coast has a few REOs, Tice said, with most of those the result of its acquisition of the Royal Palm Bank of Florida in July 2012.

“As a bank, as soon as we get a foreclosure, we are trying to actively market the home for sale,” Tice said. “From my perspective, generally speaking, most foreclosures are not being held by banks. They want to get rid of them as soon as they can.”

Realtors see that happening as well.

“The foreclosure process sometimes can take a while, but once banks are able to sell property they seem to be doing it quickly,” Fioretti said. “We would welcome any bank-owned inventory in our market. The market can absorb the available inventory.”

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