Real Estate Investing

Although short sales have become fairly commonplace in the last year, lenders have parameters that must be met to qualify to sell a home “short” of the payoff amount.  Parameters that *most* banks require, that is.  Some still don’t pay attention.  In a very illuminating post by Pacita Dimacali, an East Bay, North CA real estate agent in Alameda, one specific lender gets a pretty powerful dressing down.  She also writes on ActiveRain what conditions are defined as “hardship”:

HARDSHIP conditions include, but are not limited to:

Unemployment
Reduced income
Divorce
Separation
Medical bills
Too much debt
Death of spouse
Mortgage payment increases
Business failure
Job relocation
Illness
Damage to property
Military service
Incarceration

A friend of mine qualifies at least four of the 14 items listed here, but also deals with this bank that’s mentioned as being one of the worst for short-sales.  I think she’s bound for foreclosure before they ever get the paperwork done for a short-sale.  I hate that she’ll go through this, but she is not alone - there are a lot of people who sympathize with her position. In fact one commenter wrote (regarding the bank),

I know many say had our all-wise government just let the banks go ahead and fail it would have caused world-wide disaster. Well, I wish they had stayed out of it and let the chips fall where they may. No one comes to my aid or yours if we make bad decisions. As for the world-wide disaster, I think the banks are causing it themselves right now.

They do not care. That’s all. The top brass got their bonuses and that’s all that really mattered.

Read the entire article along with the comments.  Very very enlightening and I’m all about informing the consumer!

I love banks.  Really I do.  But I still find them to be maddening, unorganized, and foolish in some of their decisions.  This time it’s because of who they hired to do a BPO - or Broker’s Price Opinion.   When a home is facing foreclosure or short sale, before the bank agrees to the price they hire - at a very low rate - for a BPO.  They’ll find an agent, broker, or affiliate broker to go to the house to check the condition and then come up with a marketable price for the home.

Jessica Wynn Horton, broker/owner of Jessica Horton & Associates in Hampton, Georgia, wrote about her recent experience an agent providing a BPO.  Sam killed the deal on full-price offer she had received.

He told me that it would easily sell for $30,000 more in this market and that I really should raise the price.  When I asked him why some of the leading agents in my market (who had it listed before I did) hadn’t been able to sell it at a higher price….the ‘spirits’ were a bit hazy and not speaking so clearly.  When I mentioned several recent comps that had sold nearby…he turned deaf (I think that’s when the ghost of “Speedy Gonzalez” got channeled and he took off faster than Dash in the Incredible’s.

See?  Banks are killing deals - whether through the people they hire to do BPO’s or through their sheer unwillingness to be reasonable. Of course the bottom line is one pointed out by my colleague Robert, “Appraisals are just an opinion when it comes down to it.”  Same goes for BPO’s I suppose.

Photo by RBerteig via Flickr Creative Commons.

As one commenter said, “What do you expect from a $9 per hour employee?”

In Milwaukee, more and more banks are guilty of “walkaways” … they foreclose and evict homeowners for delinquent mortgage payments and then - instead of putting the house back on the market for sale … THEY WALK AWAY.

John Mulkey, a real estate blogger from Georgia, said,

What’s happening is a crime—perhaps not legally, but figuratively. Sometimes it’s a crime against the very people who have already suffered the most; and other times it’s a crime against neighborhoods trying to recover from issues of high crime and drug dealing. In the words of Catherine Doyle, attorney with the Milwaukee Legal Aid Society, “This is just the meanest and nastiest thing (lenders) could do. Even more profound is the terrible damage to the community.”

Go read his entire post because I couldn’t agree with him more.  I’m only able to share a small part of his post because of copyright issues, but it’s definitely worth a full read. From John stating that banks are taking one last shot at homeowners to this activity being egregious on a monumental scale. Also read through the comments section to see it’s happening all over the country - from Wisconsin to Arizona - banks don’t want to take title.  One commenter said,

Even bulldozed, these pieces of Real Estate will still need to have a marketable title, which seems to be a big problem. I can imagine that title insurance for this kind of situation should sky rocket. When a bad impact on the communities and all the future home owners!

Another commenter added this would’ve been a good opportunity to pass the homes to Habitat for Humanity. I think some banks / lenders need to look at the bigger picture and see how their actions are affecting neighborhoods and the good they COULD do if they’d use some common sense.

Photo by Editor B via Flickr Creative Commons.