But additionally to your post, if I were in a position to foreclose on properties with less than clear title due to lack of a fully indorsed promissory note, I would not pick on someone clearly in a position to sue me for lack of standing.
I wouldn’t be sure they’d become anti-bank (witness the Tea Party), but they would almost certainly become more volatile
The answer is that few homes can be sold for more than the Fannie Freddie limit because there is really no financing for buyers of such homes. The alternative – sitting on the non-performing loan – is attractive because a non-performing loan over the Fannie/Freddie limit requires less capital reserved than the same loan after foreclosure when the asset becomes REO and sits there month after month.
Although the mark-to-market rule applies equally to all loans https://1stamericanloan.com/pawn-shops-la/, REO’s that will qualify for the Fannie Freddie loan limits are very quickly re-sold. S., what bank would want to own a home that is “worth” more than that?
Think of it as an absorbtion rate issue. You would think there is no difference, but the difference is in liquidity and the time the capital is stuck. I can easily foreclose and turn the 10 homes within two years and, with good management, impair only $500k of capital by staging the foreclosures and REO re-sales. Can’t do it with the single home. I foreclose and am required to set aside $1 million of capital for two or more years. The reserve comes directly from earnings and, therefore, from my year end bonus.
Normall the regulators would be all over this issue and force the banks to foreclose. But the regulators are all “extend and pretend” driven because of politics.
I like Matt SF’s second alternate theory. In a non recourse jurisdiction the dollar loss on the forced sale is large and immediate. In FL if the bank is still short after the forced sale they can hound the former owner or at least pretend that debt is an asset.
I’d think the fear of mark-to-market is the biggest driver. The post’s description of the neighborhood makes it clear if the weakness were ever known, it might kill almost all the value in that neighborhood.
I wouldn’t doubt that there was some serious HELOCing going on. IrvineRenter of the Irvine Housing Blog profiled the property on Rossmore.
If you owe the banks $2000 a month that’s your problem, if you owe the banks $20,000/month it’s the bank’s problem…
What has the Third Reich got to do with it, oh now I remember, the Industrialists Banksters were all behind them…Thanks!
This guy has a 20 person sample. “Some” I take to be 2-5. That’s still a minority. And the sheriff showing up means your stuff gets dumped on the curbside. No one wants the embarrassment and the damage. If you have a lot of “stuff” as someone with a big house does, this isn’t a matter of getting a UHaul, it means getting a mover and a big truck. You can’t get that on a same day basis. Might take a day, two, maybe three. In the meantime your stuff in on the lawn, vulnerable to theft and weather damage.
Which would the bank prefer: 10 homes worth $100k or one home worth $1 million?
I agree with what you say, but the next step is where things start getting really interesting. Politically, selling “free markets” was all about convincing the posers that most of what stood between them and riches was the evil ‘libruls’ and their ‘regulations’. To attack posers’ balance sheets or more importantly their self-image is to risk changing the political dynamic a lot.
Some have attempted to calculate the positive impact to consumer spending. $1B / month is 50,000 homes in the $20K / month mortgage range.
I have personally witnessed delays of this nature in Philadelphia in the mid 90s when there was a mini boom then bust. The parallels are real estate values skyrocketing, refi for cash out then go underwater. Then papers were served by one of the top of the line politically connected law firms, but no one pulled the trigger til the e back. They are waiting, they can can afford to, they get money from the Fed. Keeping the homeowners in place is a good idea, as was stated, to keep the building from being stripped. Bottom line, they have not forgotten about anything or anyone, especially the wealth management market segment, they just haven’t got to it yet and don’t need to til they can get something out of it. It sounds like triage strategy and remember, they hate to hire people and put them on the payroll to run things the right way, this REO business is the landlord business, and it is too labor intensive, compared to robo signing and website command and control models.