Investors’ foreclosure appetite grows, headaches arise

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02/18/2011 Reuters
Investors are flocking to home foreclosure sales in California and other states where banks have rescheduled auctions postponed last year to fix loan servicing flaws.
On average, in California, investors are paying 25 percent below market value when winning the auction, versus a 15 percent premium bid of banks that take properties into their “real-estate owned,” or REO, portfolios, said Sean O’Toole, chief executive officer of ForeclosureRadar.com.
“In California, the average foreclosure is $150,000 upside down in the mortgage, so if the bank doesn’t drop the bid from the amount owed, there’s no chance the investor is going to purchase it,” O’Toole said.

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