American Repossessions Soar

Mon, 21 Jun 2010

Banks repossessed a record number of properties in May, a serious sign that the property market has witnessed demand slide considerably in recent weeks.

There were almost 94,000 repossessions by mortgage lenders in May, an increase of 1 percent from April and 44 percent from 12 months ago.

This is the tip of the ice berg as lenders are repossessing at a rate unknown of up to now.

This increase in home repossessions is considered to be related to developments in the Obama administration's housing rescue initiative; 278,000 trial mortgage modifications were cancelled in April.

When banks which offer such loans learn that they are not eligible for federal assistance, they are able to resume foreclosure proceedings.

Repossessed properties will in the end be put back into the property market, adding to an existing inventory and lowering house prices .

There was an increase of 12 per cent in April in the stock of unsold properties, to 4 million plus homes.

Demand for mortgage loans is not as high since the federal home buyer tax credit expired.

The increase in bank repossessions is going to have a depressing impact on house prices.

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