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Ahhh so small town Oklahoma. I see you don't keep up with the latest California trends.
I do. There are appraisers I am in communication with daily that describe what they see in the marketplace (that area outside the soundbites of MSM). I do it so I am prepared for what comes down the line. Usually, what happens in California, Florida, and Colorado ends up in Oklahoma within a few months.
Quote:
Originally Posted by Rakin
Then when you don't want it let it go back to the stupid lender who made the bad loan.
It's certainly not the homeowners fault.
You mean the average person who has a hard time balancing their checkbook? Who doesn't understand consumer credit?
There is a VERY simple way to NOT make a bad loan. 1) Make absolutely certain the borrow has the ability to pay it back. This is called credit worthiness. It is part of the underwriting process. It uses things like credit history, you verify income, you verify employment, you cross reference it to bank deposits and spending habits. 2) You make sure there is adequate collateral in the property being financed. You make sure the appraiser was free from pressure, you make sure the market is actually what it is and that it is not being driven by wild speculation. 3) You make sure there is sufficient equity in the property on the part of the borrower to motivate them to keep the property instead of letting it go back to the bank.
It is called prudent banking practice. Instead of providing 125% loans to people who did a rapid rescore immediately after filing challenges to legitimate consumer debt obligations, try making sure the borrower has at LEAST 25% equity in the property. That way it encourages people to pay their bill it they stand to lose $300,000.
Blaming the borrower for being a target of a predatory lender is as absurd as blaming a convinenece store for being robbed or a young girl for being raped. Yes, there are those out there that will take advantage of the situation, but the vast majority of people in society will not move or take the credit hit if there is any other option. But ut the blame where it belongs.....a predatory lending industry preying on the ill-informed. Blame a banking system that violated their own rules about lending procedures. I've talked to the heads of major banks review departments and seen where they tell the bankers to not make a loan, the appraisal is bad, and the decision is over ridden by the bank board, and the loan is funded anyway.
if they can afford to pay for their homes why would they walk away
A relatively unbiased answer follows.
A couple bought a home in 2006 valued at $500,000 and put NO MONEY DOWN. They are making payments of $3500 a month. Their income is $7000 a month. It is now 2008 and the home is now valued at $250,000, and still falling. They can walk away from their current home and rent a similar home, OR buy one, and make payments of $1750 a month. That means they can save $20,000 a year which can be used for…
1) ...taking care of their family and being able to send the kids to a good college. Thus they value their families well being over the financial commitments.
Or
2) ...continuing to live an opulent life style by leaving the bank holding the bag. The greedy bastards.
Many of these buyers were…
1) ...speculators hoping to make big bucks and flip it within a few years and make hundreds of thousands of dollars.
OR
2) ...conned by the industry, sometimes through out right fraudulent means, into buying a home far overvalued with terms that screw the buyers.
The banks with college educated managers and CEOs with decades of experience and full knowledge in markets, loans and finances made these loans with no money down because...
1) ...they got greedy and wanted to make big bucks.
OR
2) ...they were caring corporations who just wanted to help America’s Families.
The reality of the situation is there are people across the entire spectrum listed above, with the exception of the last one.
Some owners are doing it to make a buck and knowingly lied to gain such loans for their own benefit.
Others are naïve individuals with less then a high school eduction who thought they were making a better life for their loved ones and bought into the bull that the industry shoveled at them.
My brother bought a foreclosed home and he had about 10 pages of code violations on the house. Of course, that was disclosed before he signed papers. They also weren't allowed to live there til the codes were fixed. Turned out to be a money maker for him.
My brother bought a foreclosed home and he had about 10 pages of code violations on the house. Of course, that was disclosed before he signed papers. They also weren't allowed to live there til the codes were fixed. Turned out to be a money maker for him.
A couple bought a home in 2006 valued at $500,000 and put NO MONEY DOWN. They are making payments of $3500 a month. Their income is $7000 a month. It is now 2008 and the home is now valued at $250,000, and still falling. They can walk away from their current home and rent a similar home, OR buy one, and make payments of $1750 a month.
I understand that in a way if they have no equity in it. But then again doesn't this ruin their credit for future home purchases.
I bought a forclosure in 2005. It was an easy process and I bought it from the bank. Of course I did all the necessary inspections, etc. I think it is really hard to determine if you can win/lose on a forclosure based often on when you sell it. We just sold ours a month ago for a few thousand less than we paid for it --- we sold it at the worst time which I believe was the reason we did not make any money on it.
Looking back would I ever buy another foreclosure ---- Nope!! I think the costs and the physical energy to bring a house back to what is should be is unfortunately what you can't always determine when you make an offer on it. Also, the care and upkeep that is usually lacking during the time that the forclosure is happening is not always repairable without a great deal more money from you that isn't always realized up front.
I went and looked at the house today that they are interested in. It doesn't look that bad, but like one of you mentioned there is no way to know for sure unless you hire a thorough inspector. This particular house has only been empty about a month, but you are right, who knows how they took care of it before they 'lost' it. The price is $350k and there are a couple similar, 'non-bank owned' homes for sale in the neighborhood at about 100k more. Does this bank owned home need $100k in repairs? Probably not, but who knows if those other homes will sell for that price and if the market keeps falling, then what??
Personally, Id be afraid to buy ANYTHING right now, actually. They (sister and brother in law) are currently in an apt and their lease is up and the rent is going up quite a bit and thats why they decided to try to buy something.
We are looking at a few homes that are short sales and have submitted offers on 3 of them (of course we will probably play the waiting game for a long time, as short sales go). In our offer we always pay for the inspection and the home warranty ourselves for our protection and to make the offer more attractive. We have seen many homes where people just tore them up...mostly the forclosures. I think that is so sad. What good does it do them to ruin the house for someone else, just because they are bitter or upset.
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