Buyers Are Learning There's No Easy Way to Buy A Foreclosed House
By Susie Madrak Monday Apr 13, 2009 5:00pmIt seems there's no easy way out of this housing mess:
Anxious to meet the bank's demands for quick action, Andrew Garcia and his fiancee, BethAnne Hoffmann, rushed to find financing to buy a foreclosed-on house in a lovely tree-lined Baltimore neighborhood.
That was in January.
A month later, the bank that's selling the house broke its own closing deadline. The couple has been in limbo since. In frustration, they turned to their congressman's office for help. Only then did they receive an apologetic call and a new proposed closing date of April 24 -- but still no signed paperwork.
"It's unbelievable. With all we hear about all the homes out there that need to be sold, I have to call my congressman in order to purchase a house," Garcia said. "If that's the process, there's no way we're going to clear all these foreclosures."
As bargain hunters turn their attention to foreclosures, many are discovering the toughest challenge is dealing with the banks that repossessed the homes. These banks are usually quick to accept a bid and write a contract. But the closer buyers get to the settlement table, the greater the potential for bureaucratic bungling and the chance the buyers will give up.
The housing market stands little chance of recovering until the foreclosures are sold. Distressed properties make up roughly a quarter of U.S. homes for sale. Moving them would go a long way toward stabilizing home prices. But working with the banks, which are typically based far from the homes they're selling, is not as simple as buying from a regular homeowner.
"Things go wrong, and it takes the bank a lot longer to deal with them," said Vivianne Couts, a Virginia real estate agent. "There are a lot more people involved, many more layers. The Realtor can't always call the bank and say, 'What's going on here?' "
[...] When their closing date passed and no one could explain the delay, they started digging into court records. They learned that days after the bank had repossessed the home, the previous owner had filed for bankruptcy protection. Garcia said all the bank needed to do was submit paperwork to the court confirming that it had foreclosed on the house prior to the bankruptcy filing. But that letter didn't materialize until their congressman, Rep. John Sarbanes (D-Md.), intervened.
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Sad to see such games.
"it takes the bank a lot longer to deal with them"... Maybe so, but I would wager a bet that some institutions would prefer to hold onto these assets until the market turns around.... or at least they think it will turn around. If they have already written down the assets, it would probably be in their favour to wait.
Humourous in a sickening way I guess.
for a "turn around".
Unfortunate.
huh, Evet?
More squatters call foreclosures home
More at link.
the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known.
Parties over I guess
...even bank-owned repo homes are terrible to sell.
I work in a real estate office in Indiana, so (unfortunately) we have to deal with a TON of repos.
The repo market not only has all those extra layers of management hurdles to jump, but errors made by the bank or governmental agency are incredibly difficult to fix because it seems no one on the selling side wants to a) admit they made a mistake and b) go out of their way to correct it in a timely manner.
Secondary to this stupidity are the repo companies, the "middle men" between the bank and the selling real estate agency. These repo companies add an unnecessary layer to the mix. They go around soliciting contracts from banks to handle the sale of repossessed homes, and do little more than call a local real estate agent in the area to list the place. To add insult to injury, these repo companies not only pocket a fee from the banks, but they then turn around and charge a "referral fee" to the listing company.
Years ago, these fees were around ten to twenty percent of the listing company's commission which was reasonable- most referrals in real estate (at least in Indiana) are around this amount. Lately, though, the repo companies have gotten greedier, because they know that since repos make up such a huge percentage of the real estate market these days, many agents are willing to handle them for a smaller part of the commission. The last repo we handled, the repo company ended up netting almost a 45% "referral fee". Bear in mind, all the repo company does is act as the liaison between the bank and the real estate agency (years ago, the banks had their own department for this). Meanwhile, the listing agent is responsible for all the actual marketing work involved with selling the home, including paying for advertising out of their own pockets and paying all the utility bills for the repo property until it sells. The bank or repo company eventually pays the listing agency back for just the utilities, but only after the agent submits a tedious amount of paperwork AND the usual turn-around time for repayment is 30-45 days.
All this extra work on top of the usual duties a listing agent has while selling a home, and we ended up keeping only about a third of the commission when it finally closed.
who owns the house.
technically, only if the bank paid with 100%-asset backed capital the original mortgage... the house should belong to the bank.
The kicker is that for the most part, the bank did "pay" for a fraction of the house with the bank's assets. The rest of the value of the house was covered by the original buyer's "word" that he would pay the loan back. This is, the bank never purchased the house using their own assets...
There is a "funny" grey area when the fiction world of "fiat" money and credit meet real assets. I think what we are seeing is the unhinging of the system. Because, at the end of the day... it simply doesn't make any sense.
I want to see a plethora of people incorporating themselves as banks, thus creating "loans" to each other. I could theoretically give a "loan" to my neighbor, make the money out of thin air, and he could buy his dream house. My neighbor then would extend the same courtesy to me, and I would buy my own dream house. After all, that is pretty much the "scheme" most financial institution have been operating.
No wonder the Rushthugliklans hate the Europeans. Seems they're the only ones who want to hold the Bush regime accountable for their crimes. http://www.thedailybeast.com/blogs-and-storie...
Susie, I like most of your posts, but I think the Congressman should have been helping those trying to save their home.
I'm just sayin.
Peace,
JK
in the sand states the foreclosed inventory is huge. foreclosed commercial property is other problem it's just hitting the market in some areas.
We moved to Baltimore from Chicago in October for work and made an offer on a house that had undergone forclosure (we were not looking specifically at foreclosed homes; we are not predatory buyers). We offered just under the price the bank was asking because it needed major repairs (ceiling leaks and so on), and they accepted. The bank was selling the property "as is."
However, one week later, the bank's representatives said that executives further the ladder refused to accept the offer and the bank backed out of the deal.
Now, in April of this year, we see the house is still on the market but with a price $100,000 below our offer. It is being sold by the same bank.
With decisions being made by the likes of this bank's executives, is it any wonder the banking/financial industry is losing money. I wonder what kind of annual bonus the banker who refused our offer is making.
its all a game.
It's still worth it no matter long it takes, when you can instantly have 30-40K equity just by taking ownership of a foreclosure, thats what we did last year! I just wish we could have gotten the present first time homebuyer credit, but oh well.
My Brother-in-Law is still waiting for his refinancing to come through. He started in January. At this point he has heard nothing from the bank for a month. Repeated phone calls do nothing. He has given up.
Gotta love America!
Do ya think maybe the banks are waiting for more bailouts? I do.
http://iguessineedajob.wordpress.com/
When will you libs (this is a lib site, but applies to both repub's and democr's) understand that your elected officials are not for you ~ only for themselves?
WE loaned the banks money
THEY did whatever they pleased with it
ELECTED senators and congressman profit from their legislation
LOOK at the loans that were made to them! (and they didn't know they were getting 'special favors' from the lenders?)
WE are now in debt over our heads and our grandchildren and great children will be paying the price for legislation in-acted while King Obama reigns. Oh, what happened to "work together" - just another lie from K Obama..! It's his way or the highway!
YOU gotta understand, until YOU start voting for someone new (not the Obama types that continue on in the same tradition) WE will get hosed by the politicians.
WE need politicians that will VOTE for TERM LIMITS - it's the only way out of this mess
If there weren't so many leeches ready to jump in and grab all the bargains and make themselves RICH off the misery of others, the "bankers" just MIGHT have an incentive to bargain with the original borrowers to lower their payments and extend the mortgage, when a job loss or change to a lower salary or other catastrophic situation occurs, instead of throwing them out in the streets so some LEECH can come along and buy the SAME house for pennies on the dollar.
NICE!
We've had an offer on a home since May 2008. Countrywide is still sitting on its heals. We had made a lower offer, anticipating and planning for a further decline in the market. However, our offer is now higher than the current market. Essentially, Countrywide has lost an additional $200k by not counter-offering or acting upon our offer (and 6 others) that were made last year.
In addition, the home no longer has a nicely landscaped yard, since it has been left to die. I don't know if you've ever been in a house that hasn't had the water running or the toilets flushed for over a month, but it isn't pretty.
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