Someone At The Bank Is Losing It…

February 14th, 2008 categories: Local Issues, Real Estate News, Short Sales & Foreclosures

I don’t claim to understand all of the process that a bank goes through when foreclosing on a home.

Here is what I do understand…

A lot of them gave out loans that they shouldn’t have, to a bunch of people that shouldn’t have been able to get them. Fine. We all make mistakes and some buyers have dug their own ditch. So, both parties are responsible and we have to get passed pointing fingers and start coming up with solutions.

We don’t just have people who couldn’t afford their payments. We have people who can’t afford their payment once their ARM (adjustable rate mortgage) expires. You say… Why don’t they just refinance? Good question. The answer is that they can’t refinance because the home will not appraise for what they owe on it so a lender will not give them another loan. That sucks.

So, what happens?

People stop making payment and end up in some level of foreclosure. When this happens to A LOT OF PEOPLE we end up where we are right now. In a recession because so much is tied to housing.

It seems to make a lot of sense that instead of banks loosing thousands and thousands of dollars on these foreclosures that they would just contact the owner of the home and re-negotiate the loan or extend the lock on the ARM. I know this can’t work for everyone but it would help. Its better to loose a little than a lot.

There are a lot of first time buyers that like the prices on these homes but are having a difficult time getting them financed because the bank won’t give a loan on a home that is in such poor condition (most are). It also takes SOOOOOOO long to get answers and responses from banks when putting in an offer on the homes.

So, the circle continues. Too much inventory, buyers can’t get loans as easily, homes won’t appraise for re-financing so people loose more homes.