Bundle of Foreclosures to Enter Market, Risk Eroding Prices

According to a Bloomberg News analysis, a bulge of foreclosures coming through the system could further erode home prices in the U.S. According to the report, as many as 1.25 million homes are headed for auction after a probe into foreclosure practices kept them on the sidelines. For banks, the longer period in the holding pen means greater losses. Homes held for less than a year sell for about 35 percent below the value set by lenders, but at two years, the loss is close to 60 percent. Depending on their conditions, some homes could represent a complete loss. According to a report from the Federal Reserve in Cleveland, a quarter of homes in long-term foreclosure may need to be bulldozed.

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