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A different take on this (and I also don't believe in bail outs...). I'm a buyer. When I see "foreclosure," it often also says "AS IS"-- scares the bejeezus out of me. Wouldn't touch a foreclosed property with a ten foot pole. Plus, unless you're a speculator, the whole process is confusing and off-putting.
If there are as many foreclosed homes on the market as they say there are (and more to come), the small supply of buyers won't be enough to make a dent in them if they're not attractive purchases. To me, the $7,000 is the government's way of enticing buyers to at least CONSIDER buying these still-risky properties.
To the example someone gave earlier, if identical homes are across the street and one is 7k less, but a foreclosure, I'll pony up 7k more to get a home I know has been cared for, hasn't been trashed in anger and isn't "AS IS" with no promise of anything from a bank. Hell, I'd even like to make eye contact with the current owners-- knowing a place hasn't been sitting vacant is a really good start.
Lastly, many of these foreclosed homes are in new subdivisions that are WAY overdeveloped. A "good price" on a foreclosure this year could easily be the upside down mortgage of 2009. One more reason I won't sign up for a foreclosed home.
So...I don't believe in bail outs, but there is another side to this.
Well my tax dollars are bailing out a bank that's holding properties. I know how poor the banks run the REO's and they shouldn't be helped for the problems they helped create. Enough buyers already have the misconception that foreclosures are all bargains when they usually aren't that we certainly don't need more reason to push them on someone. Fixer uppers have ruined plenty of young couples already.
Secondly, why should the government get involved pushing one home over another? It's not fair to the private sellers that REO's are getting special treatment. A lot of the problems would be fixed if the banks got the loss mitigation/short sale departments working more fluently and then the same if they made it easier to buy a foreclosure. The banks are a nightmare to deal with so they should be encouraged to streamline the process and this does nothing good IMO.
As someone living in an area that is still badly inflated I can definitely say that a $7000 tax credit will not get me to rush to buy a property that is $100k overpriced. So as a stimulus, at least in my neck of the woods, it is a failure before it even starts.
So here's what I'm not understanding, a relative of mine was due to close on a house in 4 days. Today they were contacted and told their loan was denied and the only reason given was that there was too much risk in the market they were buying in. Not because they have bad credit (805 btw), not because they can't afford it (right at 3x income), not because they weren't putting enough down (20%), but because the lender is scared of all of the defaults in the area.
Granted, a lot of the bad loans out there were made by this lender but if you want to get these houses off the market and off your books aren't you going to have to lend people the money to buy them? If you don't lend people money aren't these houses just going to continue to decline in value?
It's also confusing why it took the lender a month to come to this conclusion. If you weren't going to make a loan in the area why would you approve her and let her spend her money on inspections only to pull the rug out at the last minute?
Location: Halfway between Number 4 Privet Drive and Forks, WA
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So here's what I'm not understanding, a relative of mine was due to close on a house in 4 days. Today they were contacted and told their loan was denied and the only reason given was that there was too much risk in the market they were buying in. Not because they have bad credit (805 btw), not because they can't afford it (right at 3x income), not because they weren't putting enough down (20%), but because the lender is scared of all of the defaults in the area.
Granted, a lot of the bad loans out there were made by this lender but if you want to get these houses off the market and off your books aren't you going to have to lend people the money to buy them? If you don't lend people money aren't these houses just going to continue to decline in value?
It's also confusing why it took the lender a month to come to this conclusion. If you weren't going to make a loan in the area why would you approve her and let her spend her money on inspections only to pull the rug out at the last minute?
That is horrible and makes no sense at all. Will another lender let them borrow?
See, banks getting skittish about something like this is not helping the housing market, it is further hindering it! Makes me wonder if the banks aren't in cahoot so they can unload and make people buy all their foreclosures the banks are holding.
That is horrible and makes no sense at all. Will another lender let them borrow?
See, banks getting skittish about something like this is not helping the housing market, it is further hindering it! Makes me wonder if the banks aren't in cahoot so they can unload and make people buy all their foreclosures the banks are holding.
Another lender is being sought but who knows what will happen if lenders are scared to lend in the problem markets they themselves created.
That's exactly what I'm saying. It should be the other way around if nothing else. When you buy a foreclosure you are already getting a low price for the home. Why do people need more inspiration to buy a foreclosure???? Foreclosure sales would rise and those who individuals who are selling their homes would suffer further. It's not right. If anything it should be the opposite. Offer incentives to those who don't buy the foreclosures!!!
THEORETICALLY you are getting a better price if you buy a bank owned property but not if the property was 100% financed; bought with zero down in 2005-2006 when prices were higher than they are now.
THEORETICALLY you are getting a better price if you buy a bank owned property but not if the property was 100% financed; bought with zero down in 2005-2006 when prices were higher than they are now.
I don't follow, can you explain for me? Thank you.
Another lender is being sought but who knows what will happen if lenders are scared to lend in the problem markets they themselves created.
I just read a headline this past week that some banks in the UK have halted ANY new mortgages for ANYBODY period. Let's hope that doesn't spread!
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Let's hope that doesn't spread!
