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Overvaluing residential properties and the growing glut of REO

Author

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  • Thomas J. Fitzpatrick
  • Stephan D. Whitaker

Abstract

Swelling REO inventories are the latest fallout of the housing crisis, costing lenders money and contributing to neighborhood blight. Yet lenders could avoid taking on so much REO if they could more accurately estimate the value of the homes they foreclose on, especially in weak housing markets. Correcting this apparent misunderstanding of the market could speed the clearing of REO inventories, save lenders money, and help stabilize housing markets.

Suggested Citation

  • Thomas J. Fitzpatrick & Stephan D. Whitaker, 2012. "Overvaluing residential properties and the growing glut of REO," Economic Commentary, Federal Reserve Bank of Cleveland, issue Mar.
  • Handle: RePEc:fip:fedcec:y:2012:i:mar15:n:2012-3
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    File URL: https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2012-economic-commentaries/ec-201203-overvaluing-residential-properties-and-the-glut-of-reo.aspx
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    Cited by:

    1. Thomas J. Fitzpatrick & Lisa Nelson & Francisca Richter & Stephan D. Whitaker, 2012. "The effect of local housing ordinances," Working Papers (Old Series) 12-40, Federal Reserve Bank of Cleveland.

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    Keywords

    Housing - Finance; Foreclosure - Ohio;

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