So let’s start selling the bad debt now. Why don’t the banks want to do this? Locally banks are getting bids of 70 cents on the dollar or so for foreclosed houses and won’t sell — there was a piece on local TV last night. Why not? Waiting for the bailout to make them whole I would bet.
Do you have any idea what is going on at the banks holding the mortgages?
Sure! Nothing like taxing someone who doesn't own a home...to provide a bailout that props up home prices artificially even more!
That home I said used to sell for $435,000 and was listed at $260,000. It is now at $134,000.
What do the banks do with the houses. Just give them away?
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.
There are tapes being sold in the .35-.45 cents on the dollar range right now. Of course banks are going to hang around and see how much relief their campaign contributions have bought them before they all out fire sale.
Tarpon wrote: “So let’s start selling the bad debt now. Why don’t the banks want to do this? Locally banks are getting bids of 70 cents on the dollar or so for foreclosed houses and won’t sell — there was a piece on local TV last night. Why not? Waiting for the bailout to make them whole I would bet.”
You ‘da Man, Tarpon!
Waiting for the bailout has created it’s own kind of moral hazard.
Banks will sell the 70 cents on the dollar foreclosures themselves. They will sell the 5 cents on the dollar foreclosures to the Treasury for 40 cents.