>What I am missing is that in many towns home owners are simply moving out
>leaving their homes unoccupied for vandals to strip valuable materials for
>resale. How does that help them or the agency that is holding the mortgage.
>?I would think the agencies would want to sell the houses at any price they
>can get just to take in some cash. So why wouldn't they resell them to the
>original home owner at a huge discount?
What you're missing is the illogic of banks, but in reality, sometimes they do
work deals with the current homeowner. However, most of the time, it's the
homeowner who can't keep up with the new terms anyway. If they were to
discount the note for the current homeowner, then everyone would be coming back
to them asking for a discount. However, what they will do if the homeowner is
overfinanced on the property is sell it to another buyer at a discount, I
guess it's because they believe the current buyer is not going to make it
anyway. For instance, if you owed $300,000 on a house that appraised for
$305,000 and couldn't make the payments, many times I could come along and
offer the bank $225,000 to $250,000 and they may well take it. The HUD-1
(closing statement) would have to show the current owner getting nothing from
the deal. Anything I give the owner is strictly off the books as it would kill
the deal with the bank.
I don't defend the system, I'm just explaining how the banks work. This type
of deal has to be done BEFORE foreclosure beause sometimes the loss mitigation
department understands the problem you described, otherwise you end up dealing
with the REO department, that does not seem to understand the problem, and they
expect to get full price on a property that couldn't sell for 90% of full price
for months before... which is why the foreclosure happened in the first place.
So the point is sometimes banks have their heads up their butts and cost
themselves a bunch of money and to make things worse, these departments have a
lot more activity and no more people... so they are even less efficient than
before.
--
Larry Miller
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