Federal Government Saddled with Foreclosed Homes for Sale

by Peter Vernon on Foreclosure Crisis

As the economic and foreclosure crisis continues to sweep across the country, the U.S. federal government finds itself the owner of over 50,000 forclosed homes for sale. The number of foreclosed properties on the government’s inventory is said to be enough to populate the city similar in area size of Riverside, California or Miami, Florida.

The federal government’s situation is comparable to what thousands of Americans are experiencing right now. The government is having difficulty unloading the foreclosed houses on its inventory, they remain unsold on the market for a long period of time and the properties’ values declined significantly as the housing market collapsed.

And the longer it is for the government to dispose foreclosed homes for sale, the bigger the losses it incurs. Department of Housing and Urban Development (HUD) senior adviser Bill Apgar pointed out that now is not a good time to venture into home selling because almost everyone placed their properties on the market.

Since 2007, the HUD has purchased about 110,000 properties foreclosed by its mortgage insurer, the Federal Housing Administration (FHA). Homeowners who failed to pay the mortgage for their. FHA-guaranteed loans may forced lenders to file for a claim for the remaining unpaid mortgage loans. The FHA pays the claims of lenders who, in exchange, will turn over the property’s deed to the HUD.

For the 110,000 foreclosed properties on its inventory, the HUD spends an estimated $12.2 billion to pay the claims of lenders. And out of the total $12.2 payout, HUD was only able to recover about $5.5 billion in its investments by reselling the foreclosed homes that it acquired after homeowners reneged on his financial obligation to pay their monthly mortgage.

Currently, the HUD has nearly 38,000 foreclosed houses for sale on its inventory. The total number of repossessed homes on HUD’s inventory accounted for a small portion of the country’s total number of foreclosed properties that lenders seized.

From 2007 to 2008, nearly 1.2 million were foreclosed homes for sale across the country. The country’s forclosed homes for sale started to rise when the government was spending billions to help banks and lending institutions recover from the current financial slump.