Home repossessions in US rise 11 per cent

Banks' repossession of homes in the US rose 11 per cent in May over April, in a sign they intended to unload homes in a strong market.

Bank repossessions were up in 33 states, with some witnessing a big jump, according to  market researcher RealtyTrac.

North Carolina saw repossessions rise 60 per cent in May from April, while in Oregon the rise was 57 per cent, and Wisconsin and Illinois, reported a 44 per cent increase, RealtyTrac said.

According to Craig King, chief operating officer of Chase International brokerage, given the shortage of inventory and rising home prices, banks had little motivation to hold back on any foreclosures.

Overall, foreclosure filings including default notices, scheduled auctions and bank repossessions rose 2 per cent in May from the 75-month low in April, according to RealtyTrac. Filings fell 28 per cent from a year ago.

May foreclosure starts nationwide were up 4 per cent from April but down 33 per cent from a year earlier.

However, 14 states saw foreclosure starts rise from last year, with courts or legislatures slowing down the foreclosure process in some states to make sure they were done correctly following revelations in 2010 that many were not.

Private-equity firms, hedge funds and individuals were all buying foreclosed or distressed homes to turn into rental properties as prices remained 28 per cent below their 2006 peak.

Banks showed more willingness to move to the final stage of foreclosure as there was sufficient demand and prices were improving, according to industry watchers.

Companies including Blackstone Group LP, with investment of more than $5 billion to buy almost 30,000 homes, and Colony American Homes Inc, which owned over 12,000 properties, were helping to increase prices in areas hit hard by the real estate crash by draining the market of inventory as low mortgage rates and improving employment fueled demand from buyers.