By bank repos are meant those residential houses that have been taken over by the banks after completing the foreclosure process. Lenders resort to foreclosures to realize unpaid dues from the borrowers. Foreclosure rules vary from one state to another. These may be judicial or non-judicial. The judicial foreclosures take a longer time.
After the foreclosure the house is put up for auction. When no suitable buyers come forward to bid to for the house, then the unit goes back to the banks and becomes bank repos.
These bank repos increasing in numbers are causing banks to suffer enormous losses. Already 32 banks have collapsed. Firstly the foreclosure process is costly. The banks do not get any mortgage payment but have to spend time and energy to foreclose the unit and take possession of the house.
Sometimes the occupants have to be paid money to leave the units without causing damage to the houses. The banks then appoints agents whose task it to clean up the mess left behind in these bank repos. It is an unenviable task. Sometimes the agents come across dead or dying pets. The vandalism is often an eye sore with fittings yanked off and even faucets and bathroom fittings broken or taken away. There are often holes in the walls. The gardens present a sorry sight. Usually foreclosed houses become garbage dumps. Many illegal dumping companies for a small fee dump garbage in the vacant bank repos.
The next task involves boarding up and changing the locks of the bank repos. The task does not end there because the banks cannot keep up a continuous vigil. It does not take much time for vagrants to change the locks and move in. Some do it in style so that the neighbours have no idea if the bank repos are unlawfully occupied or not. Many illegally pose as landlords and let out these bank repos. By the time the bank finds time to reclaim its legal right the fictitious landlord has vanished leaving behind a confused occupant who had faithfully paid security money and two months rent.
Considering the critical situation the lenders try to sell off the bank repos as quickly as possible. Potential buyers are taken around in bus tours to view these bank repos. In Florida some are taken out in boats to see the houses with a sea view.
The lenders have not put all the bank repos in the market fearing a further fall in the market. These houses are waiting in the wings while the lenders are biding their time for the opportune moment.