Moratorium dips supply of foreclosure homes

The nationwide moratorium has caused the number of foreclosure homes being offered for sale at auctions to dip to a record level. Buyers are now finding the market more competitive as fewer properties are put up for sale.

Since the nationwide moratorium on foreclosures have been started by Bank of America, the supply of foreclosure homes being offered for sale in auctions in Denver have dipped to a level that has made the market more competitive for buyers.

Lenders and banks have put a temporary cap on their foreclosures in 23 states after investigations on alleged irregular paperwork have begun. This has reduced the number of foreclosed properties in circulation for prospective buyers and many of them find the dwindling number an added reason to toughen up for the already competitive market.

An analysis of public-trustee data reveals that foreclosures activity were almost doubled during the first and second quarter of this year, but have since halted at the beginning of the third quarter. There were 12,172 properties that were offered at public auctions in the early half of the year compared to the 7,386 foreclosed properties for the same period last year.

The decline in the number of foreclosures had also led to fewer people attending public sales, although regulars continue to show up. Before the moratorium, a typical auction day could gather more than 130 people in a room, but this number had decreased to between 15 to 30 buyers.

Despite the slow sales and the decline in patrons, auction houses are still making sure that guidelines for paperwork are followed to the letter. Properties that are considered for auction are also put up online to generate interest from third parties. Those that fail to attract buyers revert to the bank as Real Estate owned.

Auction regulars also note that the drop in public sales attendance could be due to higher minimum bids since banks are conserving and maximizing their lean inventory of properties. Investors are concerned about the effect of a higher minimum bid on their profits after subtracting all other investment costs and charges such as insurance, title insurance, broker commissions and taxes.

The supply of Denver foreclosed properties have dramatically decreased from 90 to 100 a week to 30 to 40 properties a week. And this could still further decline as a lot of banks are beginning to review their foreclosure standards and documents.

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