[Outcast_Searcher]

$this->bbcode_second_pass_quote('Ludi', '')$this->bbcode_second_pass_quote('Outcast_Searcher', ' ')Now, anyone complains life isn't a financial rose garden when they behave irresponsibly? Bail them out with responsible people's money AND deem it politically nasty and mean if the responsible object.

[mattduke]

Does anybody here have any experience on this? I don't think we are there yet, but it looks like a real panic might develop in real estate in the upcoming years.

[Puddnhead]

Most county auditors have all their records on line now. Checking tax assessments and recent sales data might give help to give you a sense of the condition of the home. If it was bought in the past few years for a fairly low amount (ie. a fixer-upper price) and then foreclosed, it is probably still a fixer-upper and might have degraded even further.

[pup55]

I did this about 18 months ago. In this area, it is pretty easy for the bank to regain title to the house after foreclosure in that at the courthouse auction, the bidding is typically started at some function of the outstanding loan balance which is almost always higher than market....

Around here, once the properties become bank-owned, they try to put them onto the market in an orderly fashion by contracting with one of the local starving realtors to manage the sale. The result of this is that a lot of these places are sitting empty, because the realtors have been told not to drop the price, so as to keep the property values in the neighborhoods respectable, which in turn slows down the rate at which the neighbors are losing equity.... supposedly....

My intent was to pay whatever down, and do what people used to do in the old days, which was borrow the balance, rent the place out, and collect the cash flow... Well, what happens when you do that is that the numbers don't work. The entry price on the deals were too high because the bank wants to let go of these things gradually, and a lot of times the rents for comparable places in the area are not high enough to give you a positive rate of return, all other things being equal: Considering that rents have still contracted by about 5 percent per year, and the property values have still not quit declining, the rate of return still does not justify it... I went through one of those "what if" calculations and figure based on stable rents the values around here in the epicenter of suburbia are still about 20 percent too high, and if you factor in the current rate at which the real estate prices are declining, they could really easily be more like 40 percent too high...

So, as the old saying goes, you make money on a deal when you buy it, rather than when you sell it....and so I have been sitting on the idea until it looks as though things have stabilized..

These realtors still have it in their DNA that prices are going to go up every year, and in the conversations I had at the time, all of them say things like "at this price this place is a steal in a couple of years when the prices approach what they should be you will be fine" and in fact the numbers factor in about a 5% price appreciation....well, we all know that this is a fantasy....

I've toyed with the idea of paying cash, and that on the surface of it changes the calculation a little bit, but, frankly, why pay cash for a depreciating asset? It's like driving your new car off the lot....

Here is why real estate deflation is so scary: No one wants to be a buyer, even with cash, when the market is still depreciating, do they? No, they do not.... so more places get underwater, more people walk away and do strategic foreclosures, and the whole system spirals downward.... Rents are also declining about 5 percent per year..... so it makes even less sense to own a place except, and this is a big except: you are planning on paying cash, live in it yourself, plant a victory garden, and wait out armageddon.... thing is, you'd better make sure your neighbors are doing the same thing or you could be living in a war zone....

So around here, it is still not time....

[ian807]

Bottom line? You'd be a fool to purchase foreclosures right now. The bank paperwork fiasco, which the MSM has been trying not to discuss, is still in place. Despite what drivel your "friend" the realtor is babbling, it's entirely possible that nobody knows who really owns that foreclosure. It's not out of the question that the ownership has been contractually promised to several parties. In a legal dispute between banks of that size, you're not going to come out the winner. That foreclosure may look cheap, if you actually still own it in 15 years. Given the degree to which the banks own our legislature, what are the odds?

FYI, I own 6 rental units, one of which is a house I bought in 2008 before the crash. It was a foreclosure.

[pup55]

$this->bbcode_second_pass_quote('', 'n')obody knows who really owns that foreclosure.

[timmac]

$this->bbcode_second_pass_quote('', 'C')ollier County, Florida -- Have you heard the one about a homeowner foreclosing on a bank?

Well, it has happened in Florida and involves a North Carolina based bank.

Instead of Bank of America foreclosing on some Florida homeowner, the homeowners had sheriff's deputies foreclose on the bank.

It started five months ago when Bank of America filed foreclosure papers on the home of a couple, who didn't owe a dime on their home.

[Lumpy]

Thanks for posting this. Here is my "LIKE" for your post, and for the story.

My favorite part is them showing up with the moving truck and starting to seize assets. TOO funny!

Lumpy

[seahorse3]

It sounds nice, but the homeowner didn't "foreclose" on the bank. They simply filed a counterclaim, got a judgment for money damages, then sent the sheriff out to seize assets to satisfy the judgment. Legally speaking, this wasn't a foreclosure. But, I'm glad that BofA got what they deserved. Probably deserved more than they got.

[ColossalContrarian]

I have a question for anybody who knows more about buying homes, foreclosure and bankruptcy.

I know a couple who recently split due to financial problems. They went through or are still going through bankruptcy and getting divorced. I really don't know if everything is finalized because from what I understand is that it will take a few months for everything to go through. The foreclosed on their home in Las Vegas about 8 months ago, both live in separate places now and the man pays alimony because the woman wasn't working but now has a job.

The man just recently purchased a home which from what I understand is more affordable than the other house.

My question is how can someone who just foreclosed and is going through bankruptcy and divorce successfully qualify and purchase a new home?

The man owned his own investment service company that wasn't doing well and now he works for another financial planning company. I imagine the new company must be doing well now or maybe he just paid everything off and is already done with the Bankruptcy?

I just don't know how this can be possible. He said originally that the last house was purchased at the bottom of the housing bust, WRONG! and now has another house while home prices still are falling in Las Vegas which he thinks is the real bottom, probably wrong again!

[timmac]

$this->bbcode_second_pass_quote('ColossalContrarian', '
')My question is how can someone who just foreclosed and is going through bankruptcy and divorce successfully qualify and purchase a new home?

[jedrider]

You can even buy the same house back!!

No problem.

[ColossalContrarian]

Thanks for the information but I thought when someone forecloses and goes bankrupt that their credit is ruined for a few years and that they have to build it back up before they can qualify for a loan (any loan).

I understand that prices have dropped in Las Vegas and continue to do so but how the heck do you still get a loan?

[Outcast_Searcher]

This beats the hell out of me.

In a recent 60 Minutes piece on the "strategic default" movement (nationwide): in serious discussions of this issue with people planning strategic defaults, the interviewers frequently asked (deep) underwater homeowners how they were planning on handling the loss of their good credit (an assumed consequence of their walking away from their mortgage).

The most common (or weighted average, by my estimate) was:

1). Rent an apartment for a few years. (They assumed the cash they were saving living house payment free until the bank evicted them would get them a rental, despite their credit rating).

2). Build up substantial savings for several years, by making relatively cheap rent payments instead of expensive (deep underwater) house payments.

3) Assumption -- in a few years (or so), credit will be repaired enough to buy a house with a large down payment, and net, be better off financially.

Whether this is a practical plan or not, it at least sounds potentially PLAUSIBLE.

But whatever banker knowingly offers a home loan to a financially troubled person who has just been foreclosed on, needs to be fired. Of course, they probably just assume their bank will be bailed out AGAIN when the loans go south, and the hell of it is, they're probably right.

[kublikhan]

I see 1 of 2 possibilities. He is riding on someone else's credit score, such as owner financing, co-sign from a parent/friend, etc. Or he put down a large down payment and pays a high interest rate.

$this->bbcode_second_pass_quote('', 'H')ard-money lenders will often make loans six months after filing bankruptcy or a foreclosure, but will a require 20 to 35% down payment. The interest rate will be very high and the loan terms are not as favorable; many will contain prepayment penalties and be adjustable.

A borrower without a bankruptcy or foreclosure with a 600 FICO would receive an interest rate of 5.875% and pay a monthly payment of $1183 on a $200,000 amortized loan. You can see that filing bankruptcy or having a foreclosure on your record, even with a FICO score of 600, results in an increase in a mortgage payment of $215 over that of a borrower without a bankruptcy or foreclosure. However, that difference in payment will let you buy a home.

[jedrider]

I suspect that circumstances can change drastically for a person. Under water, no job, bankruptcy, house lost. Got a job, want house back at new lower price, no problem?

Not sure it is quite as easy, but consider that there is all this housing stock and as we know if you read peakoil, the houses do not take care of themselves. You do the math.

[annalynB]

You can buy your house back when you have sufficient money.

[pup55]

$this->bbcode_second_pass_quote('', 'I') just don't know how this can be possible.

[MarkJ]

Several of our employees that lost homes to foreclosure bought homes with cash, had help from family, employers (cash/credit/repairs), or bought owner financed homes.

When they started to realize the homes they purchased were unaffordable and/or they walked away since they wanted a much better home for much less money, some stopped maintaining the homes, and stopped making mortgage and/or property tax payments. This allowed them to save thousands towards the purchase of a fixer upper, or a substantial down payment.


I sell homes, building lots and acreage on land contract to some buyers that have poor credit/no credit yet have decent employment/self-employment history, income and savings with 20 percent to 50 percent down-payments, trades, collateral etc. Many borrow down payments from relatives, or borrow down payments at high interest rates.

[Sixstrings]

$this->bbcode_second_pass_quote('', 'G')ov't considers turning foreclosures into rentals

WASHINGTON (AP) -- The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.

The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent roughly 250,000 homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration. All of the homes are foreclosures.
http://hosted.ap.org/dynamic/stories/U/US_GOVERNMENT_HOME_RENTALS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-08-10-13-18-31