Repo Homes

By Repo homes are meant the bank repossessed residential houses that have been taken over by the lender after successful completion of the foreclosure process.

Generally the process of foreclosure completes with an auction in which the units are sold. But in today's market there are hardly any buyers. Thus the house reverts back to the lender. There are so many repo homes weighing down the banks that it has become not only a headache for the banks but also for the community, the local administration and the nation.

The number of repo homes is running into millions with more foreclosures rushing in. The real estate market is choked with these repo homes.

The banks are not landlords. They do not have the infrastructure to look after these huge number of repo homes. They try to sell them but even after offering huge discounts the houses are not attracting buyers. The latter are waiting and watching to see if the price falls further. Meanwhile these repo homes are like white elephants to the banks - they require maintenance and yet they do not bring any income. As a result banks have been trying to postpone taking on responsibility of maintaining the vacant units.

Meanwhile the local administration desperately wants the lenders to take over charge as the repo homes lying idle act as magnets for criminals, vandals and thieves. The unkempt gardens and stagnant pools of repo homes breed disease spreading rodents and mosquitoes. Termites too start their work of decay. Fire breaks out often.

This infects the neighbouring houses as rats and mosquitoes know no boundaries. The entire neighbourhood becomes unsafe because of rampant criminal activities. All this combine to bring down the price of adjacent properties.

The lull in real estate transaction leads to loss of revenue for the government - an administration already harassed by extra work in looking after arson and crime. Deficit budgets are plaguing the counties and cities - all thanks to repo homes.

But the other side of the coin is that these repo homes are offering an opportunity to many first time nest builders to purchase affordable houses. The banks repair the repo homes after the trauma of the foreclosure. Buyers can inspect the houses inside out - something that cannot be done with foreclosed units that are sold on an as-is basis. Moreover the repo homes are totally free from all liens and responsibilities. The government is giving various incentives for buyers to purchase these repo homes.