Bank Losses Soar on Falling Home Prices

Lenders swamped with foreclosures are selling them at firesale prices

By Jim O'Neill, Newser User

Posted Aug 13, 2008 8:05 AM CDT

(Newser) – The rising costs of carrying foreclosed homes are prompting banks to sell them off for as little as half of their original value, reports the Wall Street Journal, a strategy that’s costing financial institutions big money. The losses, and the specter of their continuing to rise, pummeled bank share prices by 10% or more in trading yesterday.

Nearly three-quarters of a million homes are now bank-owned—2 years ago, the number was just 112,000—with some experts predicting an additional 432,000 to be repossessed by 2009. They're piling up faster than they can be sold, the Journal reports; Fannie Mae owns more than 50,000 as of June 30, though it sold more than 23,000 in the first half of the year. On the bright side, falling prices have attracted bargain hunters back into the market in areas like Los Angeles, San Diego, Miami, and Las Vegas.

A home is advertised for sale at a foreclosure auction in Pasadena, Calif. (AP Photo/Reed Saxon)

A sign advertises a bank repossessed home for sale in San Clemente, Calif. (AP Photo/Tom Stathis)

A foreclosure sign tops a sale sign outside an existing home on the market in northwest Denver. (AP Photo/David Zalubowski)

A bank owned home is seen for sale in Sacramento, Calif. (AP Photo/Rich Pedroncelli)

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Bank Losses Soar on Falling Home Prices

Lenders swamped with foreclosures are selling them at firesale prices

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Bank Losses Soar on Falling Home Prices

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OTHER STORIES ON OUR RADAR

Wachovia • credit crisis • housing crisis • JPMorgan Chase • foreclosures

MOST POPULAR STORIES

[ By Views ]

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More Newser Stories

$26B Mortgage Settlement a 'Modest' Help: Experts

Many struggling homeowners not covered in deal

Banks Ink $26B Deal to Help 2M Homeowners

49 states sign on to deal with nation's top 5 banks

Calif., NY May Sign On to Robo-Signing Settlement

Obama administration nearing deal for mortgage relief

JP Morgan Coughs Up $153M to Settle Fraud Case

Investors misled about shoddy securities

Audits: Top Mortgage Firms Defrauded Taxpayers

Confidential reports could lead to prosecutions

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Newser By Users

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What is Newser?