Two thirds of current foreclosures not listed

[Geo]

I think the point is the amount of money they are losing by the way they are handling this mess. Borrowers are facing consequences. Most are losing their credit with the "possibility" of judgments and liens for years to come. Many Banks are getting bailed out. I agree with what you are saying but that is not what is happening. Banks should just tell us how much they will sell these homes for if you want to make sense of any of this. Give us a number and it is over. No, lets play the mystery game for 8 months while the market keeps dropping.

I hear this "possibility" of judgements/liens often...
Folks in the know pls enlighten me.

If someone went subprime (or alt a) with little no money down on a primary residence- someone with good intentions who had no intentions of flipping, yada, yada...

All of a sudden, stuff happens (lost jobs, divorce, etc.) and they can't pay it anymore and the market value is only 60% of the purchase price...

So with a scenario like the above, what happens if they call the bank, tell them they cannot afford it and leave the keys on the counter?

Their credit is destroyed.
What else?

Are they really doing judgements/liens?

Are the bailouts making banks more forgiving? Is the fact that the above scenario is so common these days making banks more forgiving?

Interesting times...

 

[Matt J]

I'm just wondering what will happen to home values when a bank finally forecloses, puts the house on the market for the price they feel it is worth, and the first home inspector pries open the front door to find mold, rot, mildew, etc.

 

[AAbsolute]

So much of what I'm reading in this string of Posts here reads against the United States Constitution. The U.S. has three branches of government and was set up that way on purpose. Every time action is taken inopposite to the Constitution there is an equal, lasting and opposite reaction. This system of government performs hypocritically when corners are shortcut.

I wish someone would just rip the band-aid off quickly and be done with it...the foot dragging makes things so much worse. Why does it take 18 months to work through the foreclosure process?

I understand your point and wish it would be over quickly, but the consequence of shortcutting will have affects that last through the next several business cycles.

 

[AAbsolute]

I think the point is the amount of money they are losing by the way they are handling this mess. Borrowers are facing consequences. Most are losing their credit with the "possibility" of judgments and liens for years to come. Many Banks are getting bailed out. I agree with what you are saying but that is not what is happening. Banks should just tell us how much they will sell these homes for if you want to make sense of any of this. Give us a number and it is over. No, lets play the mystery game for 8 months while the market keeps dropping.

Banks are making a business decision. There are things that banks know that we aren't privy to. It seems to me that bank loan committees should be able to decide the bank's asking price of at least 5 of their properties each time they meet for committee. There is an unknown variable in their consideration that you and I don't understand yet.

 

[AAbsolute]

As someone who does not yet own on 30-A this is music to my ears. I searched hard last year to work a short sale in Watercolor that did not pan out. That home has been unoccupied without electricity since May and the bank still has not finished the foreclosure proceedings. I cannot imaging the amount of mold that has accumulated on the inside, but it gave me very little confidence that the banks have a clue about dealing with the problem. There are going to be alot of sweet deals out there for the upper middle class with steady incomes that were previously reserved for the uber-wealthy.

Mold requires moisture. Mold issues caused by inactive conditioning can be remedied. Mold caused by recurring moisture intrusion, that's another story.

 

[Bobby J]

Banks are making a business decision. There are things that banks know that we aren't privy to. It seems to me that bank loan committees should be able to decide the bank's asking price of at least 5 of their properties each time they meet for committee. There is an unknown variable in their consideration that you and I don't understand yet.

Not sure what you mean here. I understand the foreclosure process. It takes time. Up to 24 months. But, making the short sale process smoother in a timely fashion would only making it better for everyone. This has nothing to do with a short cut. Common sense is not against the Constitution. I think the over load has bogged the system down. So identify the problem and fix it.
The consequences will still be here (borrowers and bankers) but lets get on with the consequences.

 

[Here4Good]

Banks are making a business decision. There are things that banks know that we aren't privy to. It seems to me that bank loan committees should be able to decide the bank's asking price of at least 5 of their properties each time they meet for committee. There is an unknown variable in their consideration that you and I don't understand yet.

It's dangerous to assume that banks know something you don't know - you, who are in the housing market up to your ears day in and day out, and have been for years. You have a MUCH better idea of the market and what will happen.

The only variable we do not see is the mission they have to prop the numbers up just for this quarter, since their bonuses are awarded quarterly. I do not think that bankers, or many other corporate types, are looking at the long view (and by long view, I mean past the end of this quarter or year).

Back in another lifetime, I started my career working for a retail bank. The chairman was the grandson of the founder, and the chairman of the mortgage company I worked for had been with the holding company for his entire career, 30+ years.

They always had the long view, since they had no intention of ever quitting.

Now, banks and other corporations are bought, sold, mergered and the execs don't expect to stay more than 24 months, if they are lucky. They know that the entire merry go round could stop tomorrow.

Just as all of us are sitting on our wallets (even those of us who could afford to make major purchases), and not buying cars or computers because we are acting in our own best self-interest, so are they.

There will be no reward for the executive who starts writing down principal, since the effect will not be seen for a year or more. There is no reward in following a policy which will cost more now, and (possibly) less later.

 

[Santiago]

Not sure what you mean here. I understand the foreclosure process. It takes time. Up to 24 months. But, making the short sale process smoother in a timely fashion would only making it better for everyone. This has nothing to do with a short cut. Common sense is not against the Constitution. I think the over load has bogged the system down. So identify the problem and fix it.
The consequences will still be here (borrowers and bankers) but lets get on with the consequences.

Bobby I'm with you but it's not always as easy as it looks to people on the outside. There may be a problem with a loan that you the realtor knows about, the seller knows about and the lender has a suspicion about but is not willing to deal with at the moment. The bank may not need to charge the loan down due to loan loss reserve requirements so he ignores the problem as long as he can. Maybe they know that things will get better if they can just hang on. They(the bank) are still making money and refortifying their loan loss reserves every month from the profits they are making. This enables them to carry forward another month much like the consumer that keeps paying interest. There are many cases where the banker knows that the loan has gone south but can't stand the charge off that month. You on the other side just thinks he's crazy because he didn't take that offer that you brought in. You are probably right. That still doesn't help him with his bigger problem which is keeping his reserve requirements at a level that he(the bank) doesn't get a cease and desist order slapped on.

As much shuffling and restacking the deck as the owners are doing to try to make things work, the bank's are having to do the exact same thing. You are just not privy to all of that. And then the federal government comes along just in time and re-capitalizes the bank enabling them to charge things down that should have been done long ago. As long as their basic business model is still sound, they can re-group and begin to profit and grow again. All is well. All of this by the way, has and is really happening. There's lots of interesting stories out there.

 

[AAbsolute]

Not sure what you mean here. I understand the foreclosure process. It takes time. Up to 24 months. But, making the short sale process smoother in a timely fashion would only making it better for everyone. This has nothing to do with a short cut. Common sense is not against the Constitution. I think the over load has bogged the system down. So identify the problem and fix it.
The consequences will still be here (borrowers and bankers) but lets get on with the consequences.

Here4Good and Santiago were much clearer than I can be. My point was trying to weigh liberal construction against strict construction of banking regulation.

 

[Bobby J]

Bobby I'm with you but it's not always as easy as it looks to people on the outside. There may be a problem with a loan that you the realtor knows about, the seller knows about and the lender has a suspicion about but is not willing to deal with at the moment. The bank may not need to charge the loan down due to loan loss reserve requirements so he ignores the problem as long as he can. Maybe they know that things will get better if they can just hang on. They(the bank) are still making money and refortifying their loan loss reserves every month from the profits they are making. This enables them to carry forward another month much like the consumer that keeps paying interest. There are many cases where the banker knows that the loan has gone south but can't stand the charge off that month. You on the other side just thinks he's crazy because he didn't take that offer that you brought in. You are probably right. That still doesn't help him with his bigger problem which is keeping his reserve requirements at a level that he(the bank) doesn't get a cease and desist order slapped on.

As much shuffling and restacking the deck as the owners are doing to try to make things work, the bank's are having to do the exact same thing. You are just not privy to all of that. And then the federal government comes along just in time and re-capitalizes the bank enabling them to charge things down that should have been done long ago. As long as their basic business model is still sound, they can re-group and begin to profit and grow again. All is well. All of this by the way, has and is really happening. There's lots of interesting stories out there.

I had a banker go over this with me recently but I am still puzzled why it takes 8 months to get an answer on an offer. I hear some states are looking into legislation that will not allow a short sale to be listed unless the bank states what they are willing to accept. That just makes sense. I really question the listing of a short sale if no one has been given the authority of a price. Seems almost fraudulent and is crushing the market for sellers. They become the comp but they have no basis. The sad part is I have pulled several off. The only reason is because I needed new shoes.