Bank of America forecloure alternative: famlies can rent the home
At first I was appalled when I finished reading this article. This action is something that I have considered “could happen” down the road when the collapse was in full swing. Now, after contemplating the idea of this happening, I think there could be some value with the right approach. “If”, they keep the rental rates stable and competitive. This is a much better option than having displaced homeowners hit their local existing rental markets, sucking up all the excess rental unit capacity thus making rents rise due too the increased demand.
Outside of any legal improprieties, this could be good if more rental units can come to market so rental rates can decline. For middle and lower income earners, this increases their discretionary cash. This is a good thing and results in a higher standard of living. This is good. I might add, the property owners that are now gasping because the have to service debt at a higher assumed rental rate. Well don’t worry. The banks should be compelled to re-finance these properties so we can lock-up the new rental rates. The problems you see is when relief is only given to one set of parties when there is always at least two parties (even if its yourself).
There is some substance in this proposal if it was expanded and given across the board. The logically at some point down the road maybe a “lease to own” program could be established to get home purchases to be made at the proper market price. There are areas where you allow the market to determine the outcome and then and only then, you create programs to give the assistance where it is needed to prevent having major breakdowns. Balance is the goal and difficult to find when you are dealing with various parties, I do not doubt this.
CNN - Bank of America has announced a program that will let homeowners facing foreclosures stay in their homes as renters. The “Mortgage to Lease” program will start as a limited pilot program for up to 1,000 homeowners in Arizona, Nevada and New York selected by the bank.
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Foreclosure abuse rampant across U.S according to expert
It has been sometime since my last posting. In that time, I had to undergo a major surgery. I am recovering great and should be posting with much more regularity. It has taken a few days to catch up and see whats out there to write about.
I love that the banks are paying $25 BILLION DOLLARS and are still not admitting any wrongdoing. This is just another way to reward the “bad actors” who committed fraud during the U.S. housing bubble. In the end, we deserve what we have gotten. We need to hold our representatives and regulators to account. We should of never let this deal get offered. It is quite obvious that “wrong doing” did happen so why do we allow LIES like this to permeate in our political and business culture?
At this point it is much more likely something along these lines will happen again down the line because we did not enforce our laws. A democracy needs active participation from a large majority of a countries population to be effective. A better outcome from this crisis would of been to see many executives that allowed this to happen, to be put on trial for these financial crimes. Banks that were too big to save would of been brought down to a regulatable size and banks that followed the rules would of gain confidence of the markets and customers. This would of allowed them to prosper and that is a sign of how a market economy would of worked in that situation. We need to realize that the pain is a good part of the process to shakeout the weak links in your market. In the end its all about word I have written over a hundred times…..PRECEDENT
Reuters: A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country. The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.
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J.P. Morgan will halt foreclosures in half of the U.S.
First GMAC (Ally Financial) and now JP Morgan. This is starting to seem a little epidemic. We should not be surprised if more cases of foreclosures halts come up. During the bubble we had a rush of mortgage lenders packaging these bad loans up to sell to large investment banks to make those CDOs. It is no surprise that many corners were cut in the paperwork when putting these together.
If a borrower is in default then there is a legal remedy for it but the people in the first lien position need to slow down and make sure all their ducks are in order so the borrower and lender are given all their rights in the courts through this process. We have specific rules on foreclosure and a certain burden of proof that needs to be generated to take possession of a home.
Washington Post - J.P. Morgan Chase, one of the nation’s leading banks, announced Wednesday that it will freeze foreclosures in about half the country because of flawed paperwork, a move that Wall Street analysts said will pressure the rest of the industry to follow suit.
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GMAC halts foreclosures on possible document mishandling
This could be interesting. Ally & GMAC basically were sending documents to the court that were stated as verified when they actually were not. In defense of GMAC, they most likely got the basic correct regardless like balance and time the borrower has been in default so they could be a non-issue once they straighten out their process and get corrective action in place.
The real question is when they have provide proof of the actual mortgage note that proved a legitimate claim on the home in the case of a default. Because of the securitization of these mortgages and the breakneck pace that these loans were originated, this is a very valid question and some borrowers have challenged this and won their case because the person foreclosing didn’t actually have the note.
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Foreclosed homes sell at 27% discount in U.S. as REO supply increases
Almost a 30% discount is nothing to shake a stick at when purchasing a home from foreclosure. Prices are still high for where the economy and market is at in 2010. With unemployment guaranteed to rise higher and the market selling off because of the debt crisis and uncertainty, we should expect more foreclosures in the coming years.
Home prices will continue to fall and will most likely stabilize near the pre-bubble prices of 2002. Too many jobs have been sent over seas and our industrial section has been reduced to a point where the broad portion of the real estate market is priced too high for most people who would be looking to own a home. We should look at this continuing correction as a positive move for the future. The quicker we let the market correct, the faster a durable recovery in the U.S. real estate market will take place.
We must remember that over the life of a 30 year mortgage, you are paying between 2.5-3 times the price of the home through interest charges to the bank. A dollar saved on price will save you an additional $1-2 dollars in interest over the life of the loan and that last thing we need to do is pay more than we have too for borrowing money.
Bloomberg - Homes in the foreclosure process sold at an average 27 percent discount in the first quarter as almost a third of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.
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Bank of America boosts staff handling troubled loans by 2,000
This is the reality for what is needed to handle this real estate crisis. We have chosen not to let people default so home will be foreclosed on and that would bring prices down across the board. We have chosen the path of modify home loans and re-writing principal balances. I still support homeowners that actually have the means to support the mortgage and we should keep them in their homes. If not then we need to face the fact that the home needs to be foreclosed and put back on the market at a fair value.
Hopefully the 18,000 employees that BofA has put in this division will help move through the massive backlog of defaulted homes they have on their books. Currently interest rates are extremely low levels so if people can refinance out of their high interest rate loan, this is the time to take advantage of this opportunity.
Bloomberg - Bank of America Corp., the second- largest U.S. home lender, added 2,000 employees since April to work with borrowers having trouble paying their mortgages, a senior executive said.
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San Francisco Home Prices Fall 41% on Foreclosures
This headlines says it all. Bottom line is that home prices are too expensive and until they come to a realistic level then we will continue to have turn-over in the real estate market through the foreclosure market. Heck, if the S.F. price fall some more, I might even consider moving their (But I still am not happy with there state state setup, it really adds up).
News (Bloomberg):
San Francisco Bay Area home prices fell 41 percent in April from a year earlier as foreclosures accounted for almost half of all sales, MDA DataQuick said.
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