Romanians going through the foreclosure process who have not yet lost their homes might be among the beneficiaries of the giving in payment law if enforced as passed by the Parliament. The bill, which is expecting the President to sign it into law, suspends the foreclosure process.
Bankers have repossessed thousands of properties from customers unable to repay their loans. The foreclosed homes are offered for sale below the market prices because many of them have failed to stir any interest from buyers so far.
For instance, Raiffeisen, the fourth leading lender in Romania’s banking system, has the cheapest home up for auction in Bucharest of all the five banks. A 19-square meter studio is currently listed at EUR8,000 and is located near the Piata Sudului subway station (south of the city).
The most expensive apartment subject to a foreclosure sale is being auctioned by BCR, the largest bank in the system. The asking price for the three-room apartment with a surface area of 67 square meters is 507,000 lei (almost EUR113,000).
“It’s a bargain to buy such a foreclosed home but the whole thing has become sort of a closed circle. There are a lot of people who always know what foreclosed homes are up for auction. It’s hard for an outsider to get in at these auctions,” says Liviu Andrei, chief executive of loan broker Alliance Finance.
Most properties put up for sale by banks are listed at a price as much as 25% below the initial appraisal, since they are now auctioned for a second or third time. To avoid this, when a home does not sell at the first auction, some banks buy it themselves at the second and may later put it up for sale.
“Some banks do it frequently. This is their clear policy. Others probably do not even have departments to carefully monitor these auctions,” Liviu Andrei says.
Most of the ads published by banks are for houses, apartments and plots of land, but they also include some gas stations, hotels and cars.
Although the number of foreclosed houses up for sale is higher than the number of apartments, the latter sell better, analysts say.
“Apartments sell better, especially those bought with a [mortgage] loan until 2008,” Liviu Andrei concluded.
(English version by Loredana Fratila-Cristescu)