Are Banks Eager to Foreclose?
I enjoy reading Bill Fleckenstein's because he is one of the few bears in MSM. This weeks article brings up the possibility that legal proceedings might make it more difficult for lenders to foreclose on homes in the future.
So, let's do the foreclosure math.
I'm no mathematician, but this equation is clear to me. The MSM keeps pointing out that all these bailout schemes haven't really done much yet, with only about 1% of troubled home owners getting help. I think the above is the reason why. Lender's would rather bail as soon as it hits the fan.
Picture edited out.
Federal Judge Christopher Boyko of Cleveland ruled that the mortgage investors had failed to prove they owned the properties they were trying to seize. "The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance," Boyko ruled. "Finally put to the test, their weak legal arguments compel the court to stop them at the gate."
So, let's do the foreclosure math.
FallingPrices + FutureLegalActionLimitingForeclosures + ExpectationsOfMoreForeclosuresInTheFuture + OverSupplyOfHomes = Panic * LetsForecloseNOW
I'm no mathematician, but this equation is clear to me. The MSM keeps pointing out that all these bailout schemes haven't really done much yet, with only about 1% of troubled home owners getting help. I think the above is the reason why. Lender's would rather bail as soon as it hits the fan.
Picture edited out.
Comments
Interesting find.
Foreclosure is actually very expensive for the banks especially in the depressed areas. The cost of foreclosure, basic repair, plus falling prices and paying out commissions to sell a REO property make it costly.
Wonder what will happen if banks can't easily seize the properties?
BTW, I understand what you were trying to convey, but the photo is in very poor taste. Those are our servicemen in the water. Any way you can remove it?
Regarding what will happen if banks/lenders cannot 'easily' seize property, Fleckenstein's opinion is that lending would grind to a halt. These are collateralized debts. If the collateral is not there, then how do you guarantee the loan? My guess is that in the very short term, all lending would stop. Then banks would get their legal teams together and modify theirto make it more clear that the bank may reposes the home.
Since I'm no legal expert, I have no clue what lenders would do about previously made loans which are going bad.
act to speed foreclosures. While foreclosures are expensive for banks under more normal circumstances, at this time I think they may well opt to claim their collateral and sell it for whatever it brings. Up until now they have been slow to let properties go to auction for market prices. But they've got to see that the future is likely to be worse, and with a lot of people running for the exits, it pays to be first.
While banks hate foreclosures, they REALLY hate trying to manage, maintain, and market stuff they don't know much about. They are, after all, bankers- not real estate brokers, not property managers, and certainly not contractors.
It may not be until Spring, however, that we see them really start to ramp up the process as the medium term prospects for the real estate industry come into focus.
Thanks!
I know you didn't mean to offend anyone.