Foreclosures rise despite government "aid"?

Are the Federal programs intended to abate foreclosures working?  Reuters says no!

• Taxpayers pay $700 Billion in Bank Bailouts.  Banks making massive profits and obscene bonuses while they owe taxpayers for their very existence.  So far, it's estimated that taxpayers have lost $117 billion on the program.

 

• Moratoriums on Foreclosures didn't do a thing except ADD INTEREST to the banks final forclosure judgement against the homeowner!

 

• Loan Modification efforts didn't work. In fact, the banks add late fees and interest to the new loan, raising the borrower's principal balance.   I personally "benefited" on a loan modification.  Now, instead of owing $450K on my home, I owe $530K and my home is now upside down.  BOF was kind enough to remove late fees to compensate me for applying $21,000 of my payments to forced flood insurance (which wasn't required) through an insurance company that they owned.  This modification "help" cost me, the homeowern $80K!

 

• Relocation assistance increased from $1500 to $3000 didn't work!  Basically, you get $3000, a 1099 to get taxed on the foreclosure, your credit ruined, no money to buy a new home and the BANK GETS YOUR HOME.

 

• "Delaying" a "portion" of the mortgage payment for unemployed homeowner isn't going to help. So you are unemployed, bank will lower your payment to 31% of your income which is basically unemployment insurance.  They do this for 3-6 months only and ADD THE PAYMENT REDUCTIONS TO YOUR PRINCIPAL!

 

• Now homeowner will get a chance to cut their debt by FHA GIVING THE BANKS MONEY to offset a 2.25% reduction on loans to qualified homeowners and then the FHA will refinance the 97.75% balance (adding closing costs, of course to the reduced loan which will probably make it higher than to start)

It has pretty much been conceded that the deregulation of the banking industry allowed banks to engage in predatory and irresponsible lending practices which has created a financial crisis for millions of American homeowners.

On April 14, 2010, as broke homeowner's are in fear of filing income taxes and worrying how to get the money to pay them, JP Morgan Chase posted a net income of $3.3 billion, just for the first three months of this year.

I wonder why the government "aid" isn't stopping homeowner's from losing their homes.

 

 

 

 

 

Short Sales

Question:   How are all these rich people with assets doing short sales?  Are they responsible for the differerence in what its sold for and whats owed?  Will the bank forgive the debt to some of these wealthy people who have assets?

Answer:   Actually when a property is upside down , there's a couple of ways to sell the property.

1) The seller pays the difference outright or transfers the debt to another asset for security. The bank gets all their money or at least something else to attach as security for the difference.

2) Short Sale - The seller does not have to pay the difference to transfer the title. This type of sale is subject to the bank approving it and they are taking less than what the seller owes. Whether the bank forgives the debt or not is another thing. They may require the seller to sign a note for part or all of the deficiency before they release title or they may even go after a deficiency judgement if the seller doesn't get a release. The bank will also report the loss to the IRS and the seller can be taxed on the deficiency, though the government is temporarily not taxing forgiven debt on a primary residence but this doesn't help at all on vacation homes or investment property. Short sales also mess up your credit like a foreclosure does so nobody but the bank and the buyer wins.

How to buy a foreclosure home

Posted by Frank Jenkins on March 11, 2010

If you are looking for good investment opportunities in these tough economic times then buying a foreclosure home might be perfect for you.  A foreclosed home is a property that is owned by a bank when the current homeowner could not keep up with their mortgage payments.

These properties offer the chance at a great investment because they can be bought at such a discounted price.  With the struggling economy foreclosures can be purchased for as cheap as 30% - 40% below market value and then sold for only 5% below market value which will make for a nice return on your investment.

Foreclosure Listings are Rising

Nearly 1  million homes were foreclosed in 2009 and many of these homes now appear as foreclosure listings in the multiple listing service.  Everyone has heard about short sale listings and how difficult it is to get the banks to respond offers to purchase the homes. There's a very good reason that banks aren't motivated to sell short sale listings.  First a short sale by definition means that the bank is being asked to sell the home for less than the mortgage on it.  Often, MUCH less. Secondly, the home is still occupied with an often hopeful owner who is maintaining the home and perhaps even paying association fees and taxes.  When the bank forecloses, these expenses become the bank's obligation.   Lastly, the number of delinquent mortgages are overwhelming to the bank and they simply don't have the staff to adequately review short sale offers.

Florida is a judicial foreclosure state which means that banks have to take the owner to court and win a summary judgement before they can foreclose on the home so one would think that they want to save the hassle and expense of court but this doesn't appear to be the case.  Innovations of the banking industry after deregulation has created numerous defenses to home foreclosure which will be covered in a subsequent article but many homeowners feel helpless when faced with foreclosure and allow the bank to win their property through default - the owner doesn't show up in court.  Still other delinquent homeowners arrange to turn their deed over to the bank rather than go to court. This is known as offering a "deed in lieu of foreclosure".  So the banks have now got more properties than they want without even agressively suing foreclosure  complaints in the courts and they need to sell them.

Real estate investors now have a cornucopia of bank owned properties to choose from which have now begun to populate multiple listing services.  Tradionally, bank owned properties were rare jewels offered to tried and true investors who had established relationships with the bank but this is no longer the case.  Anyone can purchase a bank owned property or REO (real estate owned) for any purpose.  In fact, many banks are offering financing on their REO's. So real estate shoppers can take advantage of the large number of bank owned properties instead of waiting months for their offers on short sales, only to be turned down.

People may mistakenly believe that bank owned properties are destroyed or otherwise undesirable.  In the Florida Panhandle real estate market, multi million dollar homes, waterfront condos, beachfront lots, prime commercial spaces and even bulk units for investment are being offered at prices well below today's market value . Just like any other seller, the asking prices for these foreclosure properties are negotiable. So if you are looking for real estate, don't pass the growing number of bank owned properties on the market today.

by:  Deborah Orr, Broker / Exclusive Buyer's Agent

In a time when sellers are in trouble and prices are soft, it's critical that buyers have their own representation working for them to get the lowest possible price on their real estate purchase.  There is an inherent conflict in representing both the buyer and the seller in a real estate deal.  Would you go to court and use the same lawyer as your opponent?  Then why would you in a real estate purchase?