Like so many other things, these shut downs have been gifts to the bankers.
“Like so many other things, these shut downs have been gifts to the bankers.”
Actually, no. Banks do not want to end up owning houses. They are a sure-fire money loosers. Often, it takes years to return the houses to the marketplace, because, as long as the banks own them, they don’t have to take the write-down on their books. In other words, if the former property owners owed, say, $100k, and the house was valued at $200k, the bank shows assets on that house of $200k. But almost all bank sales are fire sales. I have bought properties whose original cost was, say $200k, for as little as $60k, or, even $40k. And, at that, I have to put in anywhere from $20-30k to restore them to something you can rent.
On average, by the time a bank takes back a property, it’s in bad shape. I bought one that had been a drug house and was filled with used condoms, needles and other paraphernalia. The power and water had been shut off so the people living there had repurposed one bedroom as the bathroom. On top of that, there was a major roof leak and I had to rebuild part of the roof, a room and the floor. Incidentally, it was summertime and none of the guys I usually use for assistance would clean the “bathroom.” I did that myself. On the good side, I got a 1500 square foot house on a gorgeous five acre wooded lot way back in a neighborhood of similar lots. It has been my best earner as the people I rent it there always stay long, long times.
People like to dump on banks. Believe me, banks will work really hard not to take back your property. I know of cases where someone has lived in a really nice house for several years paying nothing. As long as they keep up the property, the bank didn’t foreclose. Why? Generally, it has to do with the bank’s bookkeeping. There are an amazing number of bad loans in NYC that the banks are not foreclosing on. If they do, it will cause the property values to go down and when a homeowner goes negative...owes more than it’s “worth,” they abandon the property. I think the banks call them “zombie properties.”