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tts
2011 Apr 21, 4:49am
The banks get to keep the value of the property/house on their books at foreclosure instead of short sale price. Makes them look more solvent. TARP funds are all gone as far as I know, though they still get money based on deposits from the government and are allowed to play other stupid accounting games to make their books look better.
bayview6
2011 Apr 21, 5:06am
The banks would love to do a short sale. The problem is that the seller has to be in dire financial straits in order for the bank to agree. Every seller of a short sale has to write a "sob story" to the bank and if you are not crying by the time you reach the end of it the banks are going to say "No". People who have the financial resources to pay their debts want a free ride and the banks could care else. That's the reason most short sales end up as foreclosures.
bayview6
2011 Apr 21, 5:08am
The banks get to keep the value of the property/house on their books at foreclosure instead of short sale price. Makes them look more solvent. TARP funds are all gone as far as I know, though they still get money based on deposits from the government and are allowed to play other stupid accounting games to make their books look better.
I don't know of any difference between a foreclosure and a short sale as far as the bank recognizing a loss on the transaction. Foreclosures usually cost more than a short sale and short sale usually sells for more than a foreclosure.
Potential fraud can happen. I know of at least 3 properties where the short sale buyer has deeded the title back to the seller after closing. I'd report these but nobody seems to care.
If they encourage short sales, the banks will soon need to establish a call center to cater to the RE agents to follow-up on the status of short sales from both irate agents.
The mls will also be saturated with short sale listings where the listing prices are artifially low, and the listing agent not responding to anyone since they have a buyer waiting on their side.
I don't think there is any listing/buyer agent, buyer/seller, or anybody that likes short sales. And I don't think a bank or its employees would be the exception.
fatblond
2011 Apr 21, 6:58am
Little understood is the concept of mortgage insurance on first and second deeds of trust used to secure homes. Here is a random example I googled (http://missshortsaleexpert.com/blog/58/private-mortgage-insurance-and-the-short-sale-investor/) It is far more profitable for the bank to wait for a Mortgage to go to foreclosure and then secure the mortgage insurance then it is to agree to a short sale price, even if it is for a price greater than the foreclosure sale price.
What I don't understand is why the Banks don't draw distinctions between loans with mortgage insurance and those without when discussing short sales. Surely the benefits of foreclosure with no financial benefit from insurance is less profitable than a short sale at a higher price. Maybe administrative costs are too great or the fear of "moral hazard" are too ominous.
Byte Me
2011 Apr 21, 7:34am
In terms of workflow, I'm curious as to peoples experience on how a foreclosure differed from a normal sale? And what should a potential buyer expect of the process? More time?, More competing offers than a normal sale?, etc. I ask as there is a house in the Bay Area I am interested in and I'm willing to do what it takes, but I'd like a better understanding of what to expect.
The banks get to keep the value of the property/house on their books at foreclosure instead of short sale price. Makes them look more solvent.
Aha ! So with the property on the books, it appears as an "asset"
bayview6
2011 Apr 22, 3:29am
In terms of workflow, I’m curious as to peoples experience on how a foreclosure differed from a normal sale? And what should a potential buyer expect of the process? More time?, More competing offers than a normal sale?, etc. I ask as there is a house in the Bay Area I am interested in and I’m willing to do what it takes, but I’d like a better understanding of what to expect.
I just bought a foreclosure. From acceptance by the bank to close was 3 weeks. Paid cash. House was on the market for 3 days when I offered list price with them paying all transfer taxes. They accepted after 4 days.
bayview6
2011 Apr 22, 3:31am
The banks get to keep the value of the property/house on their books at foreclosure instead of short sale price. Makes them look more solvent.
Aha ! So with the property on the books, it appears as an “assetâ€
That's not true. No difference between foreclosure and short sale as far as accounting is concerned.
I just attended a seminar on short sales and foreclosure. The consensus of the perhaps 200 realtors in attendance was that banks don't want to reach solutions with short sale-they'd rather foreclose. If the Presenters claim that banks recieve 20-25 percent more from a short sale is accurate, why are so many people complaining about the lack of cooperation from banks ? Is there some kind of double-dip into the TARP funds when foreclosure occurs ? You'd really expect banks to go for the most profit, no ?
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