Two thirds of current foreclosures not listed

The best bulk asset transfers are done without the MLS. Why would two parties who are in the business of dealing in property pay a middleman if they feel completely confident in their business? Banks and their best customers are conducting quite a bit of business without the MLS.

Flood of foreclosures: It's worse than you think - Jan. 23, 2009

I wonder if we'll see inventory levels start to rise again?

These foreclosures are sweet deals for the buyers right now. They eliminate all the pain of the short sales. I hope that all these foreclosures will make short sales so 2008! It seems that the foreclosures do not last long on the market. One of the only things the banks have done correct is price these things to sell!

These foreclosures are sweet deals for the buyers right now. They eliminate all the pain of the short sales. I hope that all these foreclosures will make short sales so 2008! It seems that the foreclosures do not last long on the market. One of the only things the banks have done correct is price these things to sell!

It's a baffling curiosity to me...

Why are banks STUCK on going through all the time & expense of thousands upon thousands of foreclosures, only to REWRITE new loans at a fraction of the original amount that they originally foreclosed on?

Wouldn't it be less costly and more expeditiously productive for the banks to immediately attempt offering some similar degree of principle loan reduction to the original defaulting mortgage holder (who if given the opportunity, may be quite capable of making good on their payments if the loan amount was lower?). It just seems that banking "solutions" are stuck in an old chicken-game-rut, in grave need of an industry driven facelift.

I'm probably just being stupid & short sighted... so I hope somebody can enlighten me.

It's a baffling curiosity to me...

Why are banks STUCK on going through all the time & expense of thousands upon thousands of foreclosures, only to REWRITE new loans at a fraction of the original amount that they originally foreclosed on?

Wouldn't it be less costly and more expeditiously productive for the banks to immediately attempt offering some similar degree of principle loan reduction to the original defaulting mortgage holder (who if given the opportunity, may be quite capable of making good on their payments if the loan amount was lower?). It just seems that banking "solutions" are stuck in an old chicken-game-rut, in grave need of an industry driven facelift.

I'm probably just being stupid & short sighted... so I hope somebody can enlighten me.

Wait! That makes sense! Have you lost your mind. This is not supposed to make sense! They are right where they belong. Taking 8 months to answer on a short sale, the market drops another 30% and they wonder what is going on? It is one of the most baffling things I have ever been involved with.
One could explain the complexity to a class of school children and they would come back with a better plan to get through this.

It's a baffling curiosity to me...

Why are banks STUCK on going through all the time & expense of thousands upon thousands of foreclosures, only to REWRITE new loans at a fraction of the original amount that they originally foreclosed on?

Wouldn't it be less costly and more expeditiously productive for the banks to immediately attempt offering some similar degree of principle loan reduction to the original defaulting mortgage holder (who if given the opportunity, may be quite capable of making good on their payments if the loan amount was lower?). It just seems that banking "solutions" are stuck in an old chicken-game-rut, in grave need of an industry driven facelift.

I'm probably just being stupid & short sighted... so I hope somebody can enlighten me.

If you are stupid and short-sighted, then so am I. I've thought the same thing many times.

Is their current response due to the nature of existing banking laws? If so, can something be done expeditiously to allow them to re-work existing loans and stop the foreclosure tsunami?

I don't understand it either - but most banking/loan/real estate regs and practices are WAY over my head or illogical IMO.

Frankly, the fact that I still don't understand the intricacies of the mortgage process makes me understand why it's such a cluster and how so many ended up with mortgages they don't comprehend.

Fewer strange rules & loopholes, plainer language, and a massive increase in accountability are needed!

John Steinbeck explained it well.

The squatting tenant men nodded and wondered and drew figures in the dust, and yes, they knew, God knows. If the dust only wouldn?t fly. If the top would only stay on the soil, it might not be so bad.

The owner men went on leading to their point: You know the land?s getting poorer. You know what cotton does to the land; robs it, sucks all the blood out of it.

The squatters nodded they knew, God knew. If they could only rotate the crops they might pump blood back into the land.

Well, it?s too late. And the owner men explained the workings and the thinkings of the monster that was stronger than they were. A man can hold land if he can just eat and pay taxes; he can do that.

Yes, he can do that until his crops fail one day and he has to borrow money from the bank.

But you see, a bank or a company can?t do that, because those creatures don?t breathe air, don?t eat side-meat. They breathe profits; they eat the interest on money. If they don?t get it, they die the way you die without air, without side- meat. It is a sad thing, but it is so. It is just so.

True Story:

Home owner in over his head with a mortgage of $575,000. He tries to work with bank about reducing his loan so he can hold on. Home owner had excellent credit during this time. The bank agrees to reduce note $200 per month. HO decides to short sale because they still could not make it work. Due to radical reduction in his pay he still could not make numbers work. First offer on home is $399,000. After many months buyer gets fed up and walks. Next offer is $325,000. I think one can tell the direction of the offers to come. Once again This buyer gets fed up and walks. Mean time the foreclosure clock is ticking and the two different departments do not work hand in hand... Homeowner receives foreclosure papers and decides he is fed up and done. He lets the home foreclose with a short sale offer in hand and with the bank. The home forecloses and gets listed for $299,000. Sits on the market and finally goes under contract for the new reduced price of $270,000.

The moral of the story: Don't even begin to try to understand it. The system is broken and we are in for a long ride. The positive side: Sure wish I was a buyer because the banks will and are doing everything in their power to lower the market. I don't believe that is the intent but just look at the outcome. Another note, many of the foreclosures are listed with out of town agents using out of town title companies. The above home did not even have the correct picture. It had a home 3 blocks away pictured. Also the sq. footage was 1000 sq. feet off!

And I bet the bank that lost over $300k on that transaction alone is either charging its customers out the wazoo for services to make it up or asking for a bailout! :angry:

Seriously, I get better service from my hometown bank when I question a $5 transaction on my credit card than most people are getting for transactions worth hundreds of thousands!

Possible solution:
Banking + ExLax = Healthy Marriage

When this whole mortgage meltdown started, it always seemed to me like the simplest thing to do would be to re-write these toxic mortgages to something the borrower could afford. It could be a lower fixed mortgage. It could be lowering the amount to a level commensurate with the actual appraised value.If all these borrowers could keep making payments the whole system would remain functioning. It would be trickle-up economics. The banks could share a little of the pain. Even before the meltdown, I heard some people proposing adjustable loans based on the appraised value rather than some somewhat arbitrary index that only benefits the bank. Does this sound sensible?

When this whole mortgage meltdown started, it always seemed to me like the simplest thing to do would be to re-write these toxic mortgages to something the borrower could afford. It could be a lower fixed mortgage. It could be lowering the amount to a level commensurate with the actual appraised value.If all these borrowers could keep making payments the whole system would remain functioning. It would be trickle-up economics. The banks could share a little of the pain. Even before the meltdown, I heard some people proposing adjustable loans based on the appraised value rather than some somewhat arbitrary index that only benefits the bank. Does this sound sensible?

That's my point. Sounds very sensible but sense is not how they got in this situation. We look to them as if they should know what to do. I am afraid they are clueless.

Skip the shorties unless you are lucky enough to step into a pre-approved number where a buyer had the paitience to stick it out and his offer was finally accepted by the lender. Then for whatever reason he could not close. The loss mitigation dept will only keep the file alive for so long, a good listing agent will scramble to find another buyer advertising the accepted number. File stays open with a quick replacement buyer and close within 45.

Skip the shorties unless you are lucky enough to step into a pre-approved number where a buyer had the paitience to stick it out and his offer was finally accepted by the lender. Then for whatever reason he could not close. The loss mitigation dept will only keep the file alive for so long, a good listing agent will scramble to find another buyer advertising the accepted number. File stays open with a quick replacement buyer and close within 45.

Which high ethical standard does the BOR or NAR does that fall under?

Closing shorties 101.

That's my point. Sounds very sensible but sense is not how they got in this situation. We look to them as if they should know what to do. I am afraid they are clueless.

I'll take disagreeing with the majority for $1,000 Alex.....

The number of loans in foreclosure as a part of all the mortgages out is small. Banks can't give a principle reduction deal to every loan currently in effect.
The banks can't, and shouldn't, give a principle reduction deal to their borrowers. Those borrowers who can't keep up with their obligations should face a consequence. Banks should also face a consequence if they can't recover their funds through the sale of the collateral.

I'll take disagreeing with the majority for $1,000 Alex.....

The number of loans in foreclosure as a part of all the mortgages out is small. Banks can't give a principle reduction deal to every loan currently in effect.
The banks can't, and shouldn't, give a principle reduction deal to their borrowers. Those borrowers who can't keep up with their obligations should face a consequence. Banks should also face a consequence if they can't recover their funds through the sale of the collateral.

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.

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.

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.

You make an excellent point. The thing that bothers me, though, is what does this do to our community as we wait? Houses filled with mold, leaks going unattended, whole subdivisions looking like shanty towns. It destroys our neighborhoods and our local economy to just let these things drag out for years.

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 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...

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.

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.

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.

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.

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.