Posted on 09/13/2010 9:02:54 AM PDT by DeaconBenjamin
The speed at which house prices fall over the next few months could depend less on mortgage rates and Americans' appetite for home buying than on how banks decide to manage the huge number of foreclosed homes they own or may take from delinquent borrowers in the near future.
Unlike home owners, banks often are much quicker to slash prices to unload properties quickly.
The upshot is that, the more homes being sold by lenders, the faster prices tend to fall. That pattern was clear over the past two years: Price declines that began four years ago accelerated rapidly in 2008 as banks dumped foreclosed properties at fire-sale prices. By January 2009, the share of distressed sales had soared to 45% of all sales nationally; it was even higher in hard-hit markets such as Phoenix, according to analysts at Barclays Capital.
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The Home Affordable Modification Program has fallen short of its goals. So far, fewer than 500,000 loans have been modified, below the target of three million to four million. Yet the program served as a "closet moratorium" on foreclosures that stanched the flow of bank-owned homes to the market, said Ronald Temple, portfolio manager at Lazard Asset Management.
The result: The share of distressed sales fell by November to 25% of home sales, and prices stabilized. After rising in the winter, the distressed share fell to 22% in June, before bouncing to 30% in July.
The problem is that these measures are wearing off. Demand plunged this summer after tax credits expired, and unsold homes are piling up. More foreclosures could move onto the market as borrowers fall out of the loan-modification program.
(Excerpt) Read more at online.wsj.com ...
This is one of the fundamentals of spurring economic growth: falling prices. Works much better than stimulus.
You know - with all the legal hoops banks have to jump through to even actually take a property when foreclosed - one would think they would be ready to unload it as quickly as possible. An empty/abandoned property loses value all by itself - regardless of the current market.
I have seen houses that have been foreclosed - the borrower is out, and the bank holds on to the property, hoping for better offers. While the property sits, unoccupied, windows get broken, property becomes overgrown, and the “appeal” that the home might have had is gone. Eventually, the property gets sold at auction... at an even greater loss than had the bank been willing to accept offers that had been made (I know - been there, made such offers).
And then the HOAs step in and try to force new buyers to pay a ton of back fees and costs.
What do they care? The home probably had PMI on it.
You are correct. My son talked with several real estate agents when he was looking last year. They all said not to even bother making offers on “short sales”. The banks were pretty much ignoring them. Sounds like they still are. In the meantime, like you said, those properties turn into a blight on the rest of the neighborhood.
I counted over 1100 Notice of Trustee Sales in Contra Costa County, Calif, in July. Contra Costa had the 4th highest median income in the state. California has 40% of the nation’s foreclosures right now.
In Florida, retired judges have been brought in to process the backlog of foreclosures with the promise of a bonus if they exceed quotas. The quotas allow less than 6 minutes total for a judge to read a file, listen to arguments, and set judgment. Most of the time they start by signing a Summary judgment while asking to hear lenders confirmation that everything is proper. Someone defending their home gets less than 3 minutes to raise questions, and by then the judge has already signed the judgment.
Had the original plan to buy assets and follow the Savings and Loan plan proceeded, would the current mess been avoided?? Wasn't the orginal plan the better one?? Was the plan to change from buying toxic assets a Gainther deal all along? The Obama machine asked and was allowed to place his people in critical spots immediately following the election.
My neighbor’s home went to auction two weeks ago and he is still living in it. We belong to an association and he hasn’t paid his dues in over a year.
Living off of everyone else—although he still uses the pool and all the facilities.
Actually, at least in Missouri, the lender/asset company clears all fees up prior to sale. The buyers have a right to 'clear' title. Realtors generally research all that to find out what possible fees are 'out there' as well.
Once a bank forecloses and the property goes to sheriff’s sale, all liens are wipes out, except federal. This is why you never buy a foreclosure before it goes through the process.....
That plan, to buy up the toxic assets, then throw them back on the market/private sector, would have prevented this (imo). That's how the original tarp was presented and that's the premise on which it was accepted. Paulson should be jailed for the biggest heist in our Nation's history.
But the bank who foreclosed on those HOA condos or homes should be paying those monthly fees, correct?
They are jerks if they are dishonest in not keeping up those HOA fee payments each month.
please refer to my post above
**Once a bank forecloses and the property goes to sheriff’s sale, all liens are wipes out, except federal. This is why you never buy a foreclosure before it goes through the process.....**
Good information to repeat for other readers who missed it the first time.
“The banks were pretty much ignoring them. “
Not if you make cash offers.
Pssst. HOAs are corporations... you know... businesses.
my guess is they will take their cues from Farm Price Support programs of the 1930’s and pay the banks to DEMOLISH these houses, reducing the supply and ergo getting prices on the uptick again. (can also convert them back to Green Space to appease the EnviroNazis)
lol that too...Just the fact that the banksters are sitting on millions of these homes for years at a time, creates less inventory, thus keeps prices up for homes selling traditionally...
Word got out long ago short sale homes are a nightmare to deal with, and most are starting to avoid them like the plague.
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