Bank Repossessions

Bank repossessions, also known as Real Estate Owned properties or REOs, are great investments since these properties are commonly sold at prices 30-50 percent lower than their original value. In the United States, the market for bank repossessions is growing because of the rise of foreclosures across the country.

In fact, according to RealtyTrac's July 2008 U.S. Foreclosure Market Report, bank repossessions are the fastest growing segment of foreclosure activity--with a 184 percent year-over-year increase. James J. Saccacio, chief executive officer of RealtyTrac, states that the sharp rise in REOs, combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale.

Usually a lender will seek to repossess a property, typically a home, if a homeowner fails to keep up with the mortgage payments. When the process of repossession is final, the bank or lending institution will own the property and will try to sell it to recover its losses. Each month, banks are able to repossess thousand of homes and other properties through various seizure and bankruptcy laws. Bank repossessions are necessary to maintain the financial integrity of banks and to protect the interests of their investors and board of directors.