Interesting. Once foreclosed, the asset is the house, not the mortgage. There is no mortgage anymore.
"Waiting for the bailout to make them whole I would bet."
There is no provision in the bailout for foreclosed houses. Of course, if credit loosened up, there would be more demand for the house and the price would increase.
70 cents on the dollar is a bargain. Housing prices have declined by 20 percent. Add in the foreclosure costs, and the bank would be making money at 60 cents on the dollar.
As I understood it, the banks still have the asset(house) on the books at the full original value. If they depreciate it to what they could sell it for, doesn’t it force a write down at the bank, their assets shrink?
Why else would they not want to sell now, even at a loss. It will be years before prices recover and they have to maintain the property.
We have had a decrease in house prices of about 27% in the local area, but it is starting to tick up.