Buying a Bank Owned Property... frustration

[2manyrocks]

Herd mentality. CYA. Lots of banking regulations and internal policies. Too much internal second guessing. Little practical experience in business other than banking. Too much concentration in overall banking markets resulting in too little efficient management from far away for individual market decision making.

Should I go on?

 

[Pete Judd]

Reminds me of a guy 20 years ago, when every thing went to **** as a major project was canceled. A person I know, owned his land outright, and bought a double wide on time. He got laid off, stopped making payments on the double wide, they reppoed it, but could not move it for another 4 years. He charged the bank rent for it setting on his property after the repo, and lived in it as well. He figures it took over 6 years before the double wide with out payments before the bank sold it back to him for cash for scrap prices. As the bank figured out how much it would cost to move out of a "pit set". Mean while, the bank payed him rent every month.

 

[ultrarunner]

Reminds me of a guy 20 years ago, when every thing went to **** as a major project was canceled. A person I know, owned his land outright, and bought a double wide on time. He got laid off, stopped making payments on the double wide, they reppoed it, but could not move it for another 4 years. He charged the bank rent for it setting on his property after the repo, and lived in it as well. He figures it took over 6 years before the double wide with out payments before the bank sold it back to him for cash for scrap prices. As the bank figured out how much it would cost to move out of a "pit set". Mean while, the bank payed him rent every month.

Banks sure do defy logic at times...

We had a great local 23 branch savings and loan... never had an issue and the staff for the most part made careers there...

I once had a question about Saturday banking and I was transferred to the CEO and founder of the entire outfit... I was 18.

They got picked up by a large commercial bank and most of the staff was let go... they also closed the local branch and built new ones in the suburbs...

My bad experience with Wells was in Olympia WA... sometimes makes me wonder how they can keep the doors open from the mistakes I've seen...

 

[beppington]

My theory: Of course banks were bailed out once before. If they go ahead & sell an asset with a constantly varying & debatable valuation (house) at a loss, they now hold the cash - nothing to argue there, it is what it is, & when the transaction is done & they've lost money on it, that's it, done deal, book the loss. They'd also lose the lender-borrower relationship that we know includes sympathy to try to help the borrower/ homeowner by govt officials. However, if they continue to hold that mortgage with its varying & debatable value, they probably feel like if things got bad enough again they could just get bailed out again, plus they still stand to benefit from any sympathetic moves by the govt to help the homeowner monetarily.

Had we never bailed out the banks the first time, I think it's much less likely they would think like this now. They'd think, "Hey, we're on our own, so we better make the best deal we can now, take the loss & move on."

Could I be on to something?

Edit: I see schoolsout already posted the same basic theory, but better in far fewer words.

Oh, & more theory: it could also be that banks think (know?) that having a non-payer in the house is actually better for the house than having it empty. Less likely to be ransacked. The non-payer may actually do some up-keep. Temperature control will prob stay on. A leaky pipe would prob get fixed by them.

 

[riptides]

Could I be on to something?

Edit: I see schoolsout already posted the same basic theory, but better in far fewer words.

It is so simple, many have missed it.

The bank gets the original money, the asset, and more money from anyone trying to "recover" the asset. If they are thrifty, and sly, , they get more money bundling the asset on paper, and bundling the paper, , on more paper.

Bottom line, they have the asset, and most everyone else wants it.

 

[bdeboer]

Last foreclosure I purchased it took 12 months to close from the sheriffs auction to actually having a title. There were 9 releases due to the previous owner (a house flipper) getting a loan on the property without ever having a clean deed.

 

[clemsonfor]

my house i live in was a forclosure bought from the bank and it took less than 2 months i beleive since offer to close.

 

[ultrarunner]

my house i live in was a forclosure bought from the bank and it took less than 2 months i beleive since offer to close.

That has to be a record...

Is this 2 months from the date the Real Estate sign was planted in the front lawn/listed on the Multiple Listing Service?

Typically, I'm seeing about 4 to 6 months from the foreclosure till the time the home is marketed.

 

[beppington]

Another thing I wonder: If cash is devaluing/ depreciating due to inflation, govt printing more cash, etc. doesn't that mean houses might actually be holding their value better than cash? As in, even if a house is depreciating, maybe it's depreciating at a slower rate than cash ... ? So another reason a bank wouldn't want to sell a house outright (sever its ties to that house) ... ?

I'm not sure ... feel free to correct me :thumbsup:

 

[ultrarunner]

Another thing I wonder: If cash is devaluing/ depreciating due to inflation, govt printing more cash, etc. doesn't that mean houses might actually be holding their value better than cash? As in, even if a house is depreciating, maybe it's depreciating at a slower rate than cash ... ? So another reason a bank wouldn't want to sell a house outright (sever its ties to that house) ... ?

I'm not sure ... feel free to correct me :thumbsup:

The reason for me even considering buying the neighbors property is because it is adjacent to mine and I believe real inflation is coming and housing has been artificially kept low...

The cost of permits and utilities here are very expensive then add the lot plus materials and labor and many homes right now are selling for less than cost...

I believe home sales have increased Statewide for the last 9 months... people are buying.

In my county... prices remain relatively flat so far...

 

[clemsonfor]

That has to be a record...

Is this 2 months from the date the Real Estate sign was planted in the front lawn/listed on the Multiple Listing Service?

Typically, I'm seeing about 4 to 6 months from the foreclosure till the time the home is marketed.

NONO sorry. I think it was listed with a RE company with a sign for something close to a year maybe? They dropped the price 20K at least from first listing. I just mean 2 months from my initial offer to me getting the keys.

 

[2manyrocks]

Given the increases in fuel costs and everything else that people buy, the only statistical reason I can think of for "no inflation" would have to be lowered housing costs. In practical terms, I suspect we already have inflation and it would be worse if the economy weren't doing so badly.

There's a difference in the way the regulators treat small banks versus big banks. A small bank can be liquidated or sold to another bank much more easily than trying to sell one of the large banks.

The way banks get bigger is to get rid of the higher salaried employees and consolidate back office operations into larger data centers. So when a small bank gets acquired, many times you'll see the more senior people either bail immediately or not stay that much longer as the buyer consolidates its grip on the purchase. As time goes on, management becomes more and more removed from the actual operation of the local branch. If they could figure out a way to just operate from a remotely controlled ATM, I'm sure they'd try it.

 

[rambler]

My question is where all the money came from to lend them? Our local rural newspaper has foreclosure ads every week from out of state lenders I've never heard of. It's not the local banks that have the bad loans for the most part. It's lenders I've never heard of.

I believe when Clinton was in office, and Republicans controlled congress, (so this is not ploitical, both paries were in on it) they determined everyone should own a house, and they passed stuff to make it so.

This was the beginning of the housing bubble.

They set up deals where lower downpayments were ok, and thy set up Freddie & Franny to bundle up loans in a big trading market, with the govt insuring part of 'qualified' loans.

This meant bigger loans at less risk to banks, and an easy way to package them together & wholesale 100's of loans all together to other banks.

So the bubble was on, there was more money, more intrest, and lower qualifications to get a loan....
Houses sold like gangbusters, demand for houses went up, new ones were built and all was wonderful, you could sell your 5 year old house for more thsn you paid for it, so houses were sold and resold and everyone made money every step ofthe way.

All because the govtr decided we were all owed the chance to own a house, no matter how poor our finances were, and besides, since houses are gaining in value, it's the best investment out there, yourhouse is worth more than you paid for it. Can even use that increasing value as colateral for a 2nd mortgage because houses are always worth more and more and more, no worries.

Freddie & Fanny made it low-risk to own a house mortgage, and made it good to own a whole bundle of all similar loans all one like the other - all your eggs i one basket. Properties or borrowers who didn't fit the 'govt ideal standard' couldn't be bundled up, so folks looking at bare property or make bigger downpayment were often left out of the loans - don't meet the 'every loan the same to give every non-homeowner a chance to get a home' model. So once the dominos fell, _every_ loan the banks held were all in free-fall, all failing the same, no spread out risk. The govt rules for these bulk loans required them all to be set up the same.

And that is how we got into the mess we are in now.

--->Paul

 

[ultrarunner]

^^^ the only thing I would add is that politicians often said home ownership is a right and that those not meeting underwriting requirements of the day were being passed over or excluded from this fundamental American Dream of home ownership...

At least this how it played out here...

 

[300UGUY]

Given the increases in fuel costs and everything else that people buy, the only statistical reason I can think of for "no inflation" would have to be lowered housing costs. In practical terms, I suspect we already have inflation and it would be worse if the economy weren't doing so badly.

There's a difference in the way the regulators treat small banks versus big banks. A small bank can be liquidated or sold to another bank much more easily than trying to sell one of the large banks.

The way banks get bigger is to get rid of the higher salaried employees and consolidate back office operations into larger data centers. So when a small bank gets acquired, many times you'll see the more senior people either bail immediately or not stay that much longer as the buyer consolidates its grip on the purchase. As time goes on, management becomes more and more removed from the actual operation of the local branch. If they could figure out a way to just operate from a remotely controlled ATM, I'm sure they'd try it.

I have a bil that worked for a very small bank - one office. It got ought out by a bigger bank, then that one got bought ot by another, and finally a 3rd. Then he lost his job. He went to work for another bank, worked about 1 year, yep, it got sold. Lost his job, hired into another bank, that job lasted about 6 months. Then to another bank, a company that trains banking folks, and a sales job in construction matierals. I think he had a couple more, but I forget where. Now he is works for a pawnshop. Likes it, hope's he can stay on there. Jobs are pretty shakey these days.