Have you ever wondered what do banks do with foreclosed properties? I know there have been a lot of write-ups on the Internet as to how banks deal with foreclosures. Others say that banks are holding on to these bank-owned properties because if they put these into market, it will only lower the home prices.

Look at some of the points Bank of America has to offer regarding this accusation:

* Foreclosure sales have been abnormally low since we learned of the pending implementation of the administration’s Making Home Affordable program. From that point, we delayed the initiation of foreclosure proceedings and sales for customers that may eligible for a loan modification under MHA. As a result of this policy, our foreclosure sales in recent months have been as little as half the normal pace we experienced before.
* Until a foreclosure is completed, Bank of America continues to exhaust every possible option to qualify customers for modification or other solutions.
* Now that Making Home Affordable programs are operational, we do project an increase in foreclosures as we exhaust every available option to qualify customers for modifications and other solutions.
* While we have very strong loan modification programs now available, unfortunately, these foreclosure projections reflect the increasing number of customers who will not qualify for loan modification because they have suffered major life events servicers can’t solve…primarily unemployment and underemployment.
* We do not hold foreclosed properties off the market. The vast majority of mortgages serviced by Bank of America are owned by third-party investors. We have an obligation to them to prepare foreclosed properties for market and sell them as efficiently as possible.

Ted Jadlos of LPS Applied Analytics stated that there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties and he believes that even though it appears that banks are holding on to these properties for so long, they are working on them. Let me quote what Ted noted:

“Just getting to the average isn’t saying all that much. We need to be close to the four year low to be fully entrenched in a meaningful recovery. Based upon foreclosure and REO timelines, it’s going to take at least 18 months to flush the system of our current problems. But to flush the problems in only 18 months, more problem loans need to leave the system relative to the new problem loans of today and tomorrow. That does not appear to be the case right now—we aren’t clearing faster than new problems are emerging. “