Furman Center Fact Sheet on REO Properties

j a n u a r y 2 0 1 0 furman center fact sheet Furman Center For real estate & urban poliCy new york university school of law • wagner school of public service In many parts o the country, the oreclosure crisis has created a glut o properties owned by banks, mortgage companies, mortgage- backed securities trusts and other investors in mortgages (all o which we reer to as “lenders”). Tese homes, oten called “REO” properties, 1 can harm communities in many ways. First, while they are REO, properties are almost always vacant, leaving them vul- nerable to vandals and thieves. Further- more, because large nancial institutions or mortgage trusts see the properties as minor assets, they sometimes do not make main- tenance o the properties a priority, and the neglected properties then can become neighborhood disamenities. I the condi- tion o REO properties deteriorates, local governments (and their taxpayers) may be stuck with the cost o providing added police and re protection, code enorcement and, in the worst cases, demolition. In addi- tion, because oreclosing lenders oten put REO properties back on the market imme- diately, these properties can swamp already 1 “REO” stands or “Real Estate Owned,” a shortening o the “Other Real Estate Owned” category o assets that appears on the nancial statements o mortgage lenders. REO properties are just a subset o vacant properties resulting rom the oreclosure crisis; many properties are likely vacant well beore they complete the oreclosure process and become bank-owned, because the owners and tenants have let the property. weak real estate markets, urther pushing down home values. Finally, some investors in REO properties let the properties dete- riorate urther while they hold them or resale, or quickly resell the properties ater making cosmetic repairs that may hide the properties’ serious deects. Despite the possible negative impacts REO properties can impose on surrounding neighborhoods, little is known about the nature or size o the stock o REO properties in New York City, in large part because th ere is no reliable or publicly available source o data on REOs. Te Furman Center has ana- lyzed property sales data rom the past 15 years to ll this gap. 2 In this act sheet, we describe what happens to properties that enter oreclosure and provide detailed data about the size o the REO stock, the length o time properties stay as REO, and the sales o properties out o REO. We report on these trends over the past 15 years, pay- ing particular attention to changes in recent years as a result o the current downturn. 2 See the Methodology section or more detail on how we identiy REO properties. w w w . f u r m a n c e n t e r . o r g F oreclosed Properties in NYC: A Look at the Last 15 Years

Furman Center Fact Sheet on REO Properties

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