Posted by 101livescan on 9/15/13 6:50pm
Msg #484732

Zombie Foreclosure Inventory

Bear900, what do you make of this story from DS News? When will banks let loose of this shadow inventory, hence stimulating sales/purchases. Or perhaps the GOVT has said they need to wait for HARP3 to roll out.

Would love to hear your thoughts on this.

http://www.dsnews.com/articles/real-estate-professionals-must-battle-foreclosure-zombies-to-survive-2013-09-04

Reply by MW/VA on 9/15/13 7:46pm
Msg #484736

Re: Zombie Foreclosure Inventory n/m

Reply by MW/VA on 9/15/13 7:47pm
Msg #484737

Hit enter too soon. That's really interesting, Cheryl.

I had no idea that situation existed.

Reply by MonicaFL on 9/15/13 7:57pm
Msg #484743

Re: Hit enter too soon. That's really interesting, Cheryl.

my son has been working by taking pictures of foreclosures that have been empty for years!!! My take on it is this - as long as the homes are in foreclosures the banks can probably take a "loss" so they just hang on to them until someone gets wise to what they are doing. Some of the homes he takes pictures of are really beautiful homes and it seems a real shame that they have been standing empty for so many years. And, oh yes, I almost forgot, most of the pictures he takes are for BoA!!!!!

Reply by 101livescan on 9/15/13 8:21pm
Msg #484745

Not surprising.

I know three people who still live in their Santa Barbara homes, they've been staving off foreclosure with BofA for three years, divorce, bankruptcy, and finally, they just left everyone hanging out there. Meanwhile BofA is paying taxes and insurance and no $$ is being paid on existing liens.

Interesting.

Reply by loancloser46 on 9/15/13 8:41pm
Msg #484747

Me too C....pisses me off. I know a couple who have rented

out an investment property for over 3 YEARS and pocket the cash every month from the renter and do not pay the mortgage.The rent would pay the mortgage but property is underwater, so they are taking the money as long as they can get away with it. They charge renter $1,400 a month. Renter pays cash.
3 years @ $1400 a month is about $50,000.....tax free. At least I know I am honest. Would rather struggle a bit than be a liar. Karma will bite you in the butt one day if you live your life like that.

Reply by MW/VA on 9/15/13 8:44pm
Msg #484748

That's just disgusting! Some people don't understand what

stealing is, and that's exactly what they're doing. How can this not be seem as fraud?

Reply by Linda_in_MI on 9/15/13 8:57pm
Msg #484749

Was a time when financial instit. had limits on assets

I worked for Federal Home Loan Bank Board 1988-90. I was admin to several managers who examined the banks/credit unions to make sure they were following the rules and standards. One of the things that they looked at was the assets that the banks had on their books and the ratio of assets to cash. I have to wonder how these portfolios of assets are being regulated--if at all.

Reply by 101livescan on 9/15/13 9:12pm
Msg #484750

I think it's the TOO BIG TO FAIL concept?! n/m

Reply by JanetK_CA on 9/15/13 10:07pm
Msg #484754

Re: Was a time when financial instit. had limits on assets

A lot apparently changed after the Glass Steagall Act was repealed in, I think, the late 90's. There's some reference to that in the article someone posted (CJ?) this weekend about the potential new Fed Chair.

Reply by JanetK_CA on 9/16/13 12:59am
Msg #484758

Re: Hit enter too soon. That's really interesting, Cheryl.

It wouldn't surprise me if the vast majority of those properties are from Countrywide, which B of A was pretty much forced to acquire, according to what I read somewhere. It bothers me that Angelo Mozilo is still walking around a free man. A significant number of loans I saw during the mania days that concerned me were from Countrywide.

Reply by 101livescan on 9/16/13 9:28am
Msg #484767

Payback from community acceptance is not enough for AM

When he walks into a room of people at charity events, he is shunned. You can see all over his face that he knows people don't like what he and his followers did. Greed, Greed, Greed. He gives lots of money to philanthropic groups, it can't buy him the respect he would like to have.

His first lieutenants started up Pennymac in Moorpark, CA. It thrives today.

Reply by JanetK_CA on 9/16/13 4:20pm
Msg #484807

Re: Payback from community acceptance is not enough for AM

I also read on Wikipedia that he helped found Indy Mac, too. That shouldn't have surprised me... Countrywide and Indy Mac = two of the biggest offenders to the mortgage meltdown, imho.

Reply by Marazz/AZ on 9/15/13 9:15pm
Msg #484751

It's not my area of expertise so just speculating. But I wonder if the banks can count the value of the property as an "asset" on their books. And if the last time they had it appraised was when they made the loan, they they can count the full value from when the loan was made, as an asset. If they move to foreclose or short sale I would suspect they then have to get an up to date valuation and now this asset doesn't look as good on their balance sheet.

Although, I dunno, I might be giving them too much credit. I have heard some horror stories about trying to deal with banks from friends trying to avoid foreclosure, as well from others trying to buy REOs. Didn't sound like there was anyone left working at the big banks that had a clue.

Reply by 101livescan on 9/15/13 9:26pm
Msg #484752

If they don't own it yet (haven't taken it back on their books), it's classified as a non-performing loan, and is not considered an asset. At least in the old days 80s and 90s when I worked for a bank. That's why the property would be transferred to someone outside of the bank, an investor, and property would sell and then be flipped. In this way it would be taken off the liabilities immediately.

BTW, that bank is no longer on the planet, FDIC took it over.

Reply by Bear900/CA on 9/16/13 1:31pm
Msg #484794

“Only stupid money is buying now”

Oh Boy. You are asking me to out myself.

The above statement has been my core belief for the last two years. I am somewhere between a realist and a pragmatist. I rely heavily on logic more so than numbers which we have seen time and again to be wrong, misstated or skewed, even wishful.

I feel that whatever numbers they toss out are less than half because they don’t address the number of homes in default heading towards foreclosure.

Than I would double that figure based on the following logic:

• People who are still in dire need of refinancing have just been cut-out of redemption and will head towards default.

• Loan mods, ARMs, and fraudulently made loans are out there in greater numbers than we might expect. These will have a high default rate.

• Banks are unwilling or unable to complete the sizeable modification requests that have not reached a default stage. These could go into foreclosure.

Why would a real estate professional whose job it is to be enthusiastic and positive about selling homes make the above statement? Perhaps because he is in the hardest hit sand state. Oddly enough, other reports are claiming NV has the largest appreciation build-up of any other state. What’s the problem? Many, but I will side with him out of logic based on additional factors. I get pummled daily with positive reports from my own industry leaders. I know them and know what drives them.

Another oddity: why do we see an increase in mortgage companies especially when more banks are laying off LO’s? Logically, there are many skilled LO’s looking for a place to work. Do you know how easy it is to set up shop if you’re licensed and qualified? More easily than you might think.

Why the zombie inventory? Logically, it exists in zombie banks lead by zombie managers. Foreclosures are initiated and abandoned becoming zombie inventory because write-offs must appear on the books. Would you push the process if it meant your neck? Once they are in foreclosure process they cannot be modified. Ineptness or poor descision making by the bank may have gotten them into a default status before they could be modified. Judicial process can be lengthy unlike trustee sales. Banks feeling they can hold on until the homes “appreciate a little”? That would be wishful thinking and dear in the headlights mentality, so maybe it fits.

The banks already know there is a canon in their face as they walk out there door. They are artificially propped up by zero or low interest federal money, purchase of mortgage backed securities (MBS) in record numbers that will come to a halt, a god-knows what end in sight of the GSEs Fannie and Freddie, and a looming bond bubble burst. I would get out of dodge!

Reality check is one reason I read this forum: Notaries are the boots on the ground and are a rough barometer of movement depending if they report with logic and reality or with emotion. We know who the players are and by now you all know me. This industry is about 10% logic and 90% emotion. Many here are wise enough to use additional sources and connect all the dots instead of hearsay. Reading this and other forums isn’t necessarily going to educate though it’s a nice place to hang-out and learn in the process. Shut off emotions and what is happening within a 100 mile radius. Always ask what is the worst possible scenario based on a logical order of events and prepare for it, then work for the best and most of all protect yourself.

Best!

Reply by jba/fl on 9/16/13 2:22pm
Msg #484800

And now for a little levity:

"...dear in the headlights mentality, so maybe it fits."

The bankers are throwing their loved ones first so that they may retain an appearance of working towards solutions.

"The banks already know there is a canon in their face.."

I hope you meant: Canon (game), an online browser-based strategy war game as this is just about what the entire industry is about now.

I know I am getting out of Dodge - hope to meet up with you on the other side Bear - you do deserve some hugs. j{laughingly, skips away}

Reply by Bear900/CA on 9/16/13 3:21pm
Msg #484802

“When will banks let loose of this shadow inventory, hence

stimulating sales/purchases.” I didn't quite get to that did I?

I don’t know but suppose it was tomorrow. Before most become sales pending and obtain financing the Feds will have started their “taper light” that is lightly tapering off purchasing of Mortgage backed securities (MBS).

Interest rates will jump to 6% overnight and even more beyond. So much is predicated on this alone.
Your good question is bigger than any good answer or else we would be reading about it.

I am the Wall Street bank; you are the Federal Reserve and Treasury.

You give me sacks of cash with no demands on how to use it. You charge me no interest. I build up my sacks of cash and as a reward, you pay me interest on it so that I remain a healthy bank. I will reward myself and all my minions for being so smart with huge salaries and bonuses. What are a few foreclosures?

What, you are going to stop giving me money at zero interest, stop paying me interest on the sacks of cash for not lending it, and stop purchasing mortgage backed securities? I better get rid of this inventory. Need to hire some people. Where are they? Oops! I just laid them all off.

Somehow I manage to put them on the market. I also have money to finance them. Thank you.

You and I both know something. The minute you stop buying MBS the bond market will tank and investors will flee. The bonds become worthless. Mortgage money dries up and interest rates skyrocket. People can't afford to purchase or refinance my foreclosures. More homes go into foreclosure and they will be worth even less because hyper-inflation has knocked people into the pit of despair.

I need more money from you and more federally assisted programs. You can't borrow more. You have to print more making a dollar as good as a Zimbabwe $1,000 bill.

Families go back to moving in with each other.

Cities begin to use police power (eminent domain) to take over mortgages on homes that are underwater. Cities go broker in the process. Chaos results as the effect spirals out of control.

You and I become unfathomably rich starting a pan-handing franchise.