Banks are overwhelmed by foreclosures

Discussion in 'Economics' started by turkeyneck, Apr 4, 2008.

  1. ``Some people stay in their houses until someone comes to kick them out,'' said Angel Gutierrez, owner of Dallas-based Metro Lending, which buys distressed mortgage debt. ``Sometimes no one comes to kick them out.''

    Banks are reluctant to foreclose on homeowners for a variety of reasons that include the cost, said Peter Zalewski, real estate broker and owner of Condo Vultures Realty LLC, a property consulting firm in Bal Harbour, Florida.

    Legal fees and maintaining a vacant property while paying the mortgage, insurance and taxes can add up to as much as 15 percent of the value of the home, and it may take months for the foreclosure to work through the legal system, he said.

    ``The end result is taking back a property that the bank will have to manage, rent out and or sell,'' Zalewski said.

    In many cases, lenders also have to foot the bill for fixing up vacant homes that have been vandalized.
  2. They will just use tax payer money to fix these homes up. Just watch the up comming bills. It will do nothing for home owners but will do everything for the banks.
  3. I heard that banks in Las Vegas - highest foreclosure rates - are
    paying foreclosed homeowners to leave and not trash the home
  4. You know, the banks would be better off refinancing them into a short-term interest-only mortgage at a rate the homeowner could afford to pay.

    Otherwise the bank is going to be out several thousand dollars on loss of principal and another $20,000 in legal fees.

    Once (If) the real estate market picks up again, when the home value exceeds the mortgage and foreclosure costs, then it would make sense to foreclose.

    If a person has a 400k mortgage and the house is worth 350k, and depreciating. why exchange the 400k in debt for a 350k house that is rapidly depreciating with high monthly maintaining costs.

    By refinancing into a interest-only mortgage, you keep the 400k on the books, avoid foreclosure costs, plus get a little bit of interest.
  5. Mvic


    You just have to laugh as if you get mad about this shit you will give yourself a stroke and be stuck paying for all this crap AND have drool dripping down your chin.
  6. I don't give a shit about the banks. What really bugs me is the recent legislation to take our taxdollars to bail out speculators , homebuilders, and prop up the bubble. Even the socialist liberals are pissed as it does little for the honest hardworking people who are losing their homes.

    Unfortunately you can't laugh because there is absolutely nothing funny about it.
  7. That is one of the wisest and funniest things I've read in awhile.
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  9. this is a very bad idea. if the borrower is in poor financial health and has shown repeatedly they aren't worthy of credit, why continue to grant them credit and give them low interest rates and i/o-only payments? that's something you only give to the best, low-risk borrowers, not the worst, hi-risk ones. you are basically saying that if a borrower has terrible credit, let's give them the best rates and terms. makes no sense at all.

    and even if they refi at a lower rate, within a few months they'll probably become delinquent again. that's why their credit sucked in the first place: they have over and over shown an inability to manage their finances. you don't get a bad credit score simply from being 1 month late on a visa payment in the last 5 years. to get a shi**y fico score like these subprime people have, you must show a history of credit ineptitude.

    the best thing the bank can do is foreclose and get it over with. these homeowners should never have been borrowers in the first place.
    #10     Apr 7, 2008