[Scott456]

Originally Posted by olecapt

....
Nah...I don't think they are doing any rational analysis. Just a happening.

It could also because of the incompetent people at the bank. Management lack professional expertise, not taking resposibility, and the lower level workers just push papers around, waiting for someone else to tell them what to do. Welcome to the wonderful "American work culture".

[SportyandMisty]

Originally Posted by olecapt

I am very skeptical. In their service role particularly I would think random happening is a much more likely explaination. Maybe with a little greed working on the part of some.

Pricing is often wrong to the point of being insane...and in both directions. They obviously "lose" homes. Been a number sitting around for long periods with no action. The only reasonable answer is they dropped through a crack. Had one back a ways that could easily have been short saled successfully. The bank grabbed it...without foreclosing ... and then refused to deal with it. Sat there over a year.

Had a virtually perfect little home in the NW foreclosed after BofA screwed up two short sales in a row. Could have sold that house forever for above 200K...Bank let it go to a private party for $137K who then turned around and sold it for $178K in 60 days.

There have been at least three deals with the lender insisted on us lowering our offer. They give us a take it or leave it at less than we were offering.

Nah...I don't think they are doing any rational analysis. Just a happening.

Certainly, there is overwhelming evidence of inefficiencies in the system.

That's the part that befuddles me.

When there is a short-term change in business, I can understand a business not responding well & not managing it effectively. But we've clearly gone beyond short-term into long-term. Banks, both for their own portfolios and as servicers for 3rd party portfolios, surely realize & recognize that this is the new normal for many years to come. They should have adapted by re-engineering their business processes to be much closer to optimal than all evidence suggests they have.

It just seems so ripe to hire a consulting company or two full of Industrial Engineers (maybe someone like Booz & Co or Arthur D Little) to systematically go through and ask all the employees in banks & 3rd party servicers associated with the mortgage mess, "tell me, just exactly what do YOU do each day?" & then re-engineer all the processes involved in short selling, REO & trustee sales.

Of course, that's easy for me to say; I'm retired. :-)

9 months ago or so I tried to buy a short supposedly approved by the bank at $900k. I thought the house was worth $840, which I offered, and only budged up to $844. After many months, I walked away as the bank (BofA) kept not doing anything. They foreclosed about 6 months ago & it is now on MLS for $699K.

Clearly, this is not what economists would call an efficient market. I just can't figure out why the banks have not pushed harder for this to become an efficient market.

Maybe they are not convinced this "new normal" is indeed the "new normal."

Maybe they just think they can wait 5 years & their portfolio will be worth a lot more.

[olecapt]

If it was not sad enough already...get this...

housing-markets-collapse-2012-247: Personal Finance News from Yahoo! Finance

@TonySoprano - Note who is immediately in front of Las Vegas.

@MMB - Check who is number 9...

This should be interesting. It requires a yoy quarterly drop from 2011 to 2012. That might be fun to track. Let us see.

[happyhunting]

This is just a theory, but is it possible this inefficiency in the banks to foreclose, or to accept good short sales, is not because of incompetance, but purposeful?

My friend offered to short sale her house (She's 200k or more upside down) but the bank refused several short offers and wanted her to sign a promisary note saying she'd cover deficiency. They'd string buyers along for months, then not accept till they walked. She hasn't paid since the very begining of 2009 (2 1/2 years), and it's been empty for a 1 1/2 years. She was layed off and left the state for a new job. Her loan terms were good, 30 year fixed with a good say 15% down and PMI on the loan. The loan is either Fannie or Freddie, not sure which. B of A refuses to foreclose, they just let it sit there.

Our line of thinking is that there are several people out there like her. They don't want to take the loss on the books, and by accepting a short they have to accept the loss. As it is now, Fannie/Freddie is paying the bank, since it's backed by them. The longer they can drag it out the longer the loan looks good on records for their investors. Also when they do finally foreclose, they get the top 20% of the loan covered by the PMI default insurance, they already have the down payment (over 50k) and about 6 years of on time payments, and they've been getting steady payments from the government, plus they get to sell the house.

Now this may not be every house. But those with government backing, default insurance or large down payments, and that are severely underwater.......maybe that is a factor.

[eventusstultorummagister]

Originally Posted by olecapt

If it was not sad enough already...get this...

housing-markets-collapse-2012-247: Personal Finance News from Yahoo! Finance

@TonySoprano - Note who is immediately in front of Las Vegas.

@MMB - Check who is number 9...

This should be interesting. It requires a yoy quarterly drop from 2011 to 2012. That might be fun to track. Let us see.

Hmm... Phoenix doesn't even rate honorable mention. That Khun Trevor guy's moves look sharper and sharper every day!

Seems like buying is nothing but stress while renting has been a joy. Gold broke $1800 and headed for $2000. Sun is shining, life is beautiful...

[WestieJeff]

Just to be clear here, the bank isn't getting any payments from Fannie or Freddie. The bank merely services (collects payments) on the loan for the investors. If the bank (services) doesn't get paid, investors don't get paid and Fannie/Feddie have to step up and cover the bond payments they pay their investors (investors could be the US treasury, a foreign investor, your 401k, etc.).

The longer they drag out the foreclosure, it does improve their balance sheet, but not their cash flow.

Getting 6 years of payments doesn't mean jack. The investors have been getting paid out that money for the last 6 years. The investors who put up the initial (just for example) 100k, they expect to get paid an interest payment each year plus the principal back. Anyone who thinks, gee golly, they should be happy they got those 6 years of payments, has never been an investor.

It's very clear the average joe thinks the banks are making out like bandits with these shorts and foreclosures. The banks are merely servicers (at least on 1st mortgages) and get paid either way as long as the mortgage still exists.

Originally Posted by happyhunting

Our line of thinking is that there are several people out there like her. They don't want to take the loss on the books, and by accepting a short they have to accept the loss. As it is now, Fannie/Freddie is paying the bank, since it's backed by them. The longer they can drag it out the longer the loan looks good on records for their investors. Also when they do finally foreclose, they get the top 20% of the loan covered by the PMI default insurance, they already have the down payment (over 50k) and about 6 years of on time payments, and they've been getting steady payments from the government, plus they get to sell the house.

Now this may not be every house. But those with government backing, default insurance or large down payments, and that are severely underwater.......maybe that is a factor.

[olecapt]

Originally Posted by eventusstultorummagister

Hmm... Phoenix doesn't even rate honorable mention. That Khun Trevor guy's moves look sharper and sharper every day!

Seems like buying is nothing but stress while renting has been a joy. Gold broke $1800 and headed for $2000. Sun is shining, life is beautiful...

Phoenix is down about 9.5% yoy on Case Shiller. LV is down about 6.6%. Actually the 20 city composite is down 4.5%.

[eventusstultorummagister]

Originally Posted by olecapt

Phoenix is down about 9.5% yoy on Case Shiller. LV is down about 6.6%. Actually the 20 city composite is down 4.5%.

What's their unemployment rate compared to Vegas?

[tony soprano]

YoY, Vegas housing prices have outperformed Phoenix. Although Phoenix is a worthy challenger, Vegas still owns the title for worst performing peak-to-trough housing prices.

[happyhunting]

Just to be clear here, the bank isn't getting any payments from Fannie or Freddie. The bank merely services (collects payments) on the loan for the investors. If the bank (services) doesn't get paid, investors don't get paid and Fannie/Feddie have to step up and cover the bond payments they pay their investors (investors could be the US treasury, a foreign investor, your 401k, etc.).

The longer they drag out the foreclosure, it does improve their balance sheet, but not their cash flow.

Getting 6 years of payments doesn't mean jack. The investors have been getting paid out that money for the last 6 years. The investors who put up the initial (just for example) 100k, they expect to get paid an interest payment each year plus the principal back. Anyone who thinks, gee golly, they should be happy they got those 6 years of payments, has never been an investor.

It's very clear the average joe thinks the banks are making out like bandits with these shorts and foreclosures. The banks are merely servicers (at least on 1st mortgages) and get paid either way as long as the mortgage still exists.

It was a "theory" so simmer down. I never said they made any money on shorts. On the contrary, I think they LOSE money, which is why I think they'd rather foreclose. We were trying to figure out why they would let a house sit for 2 and a half years, no payments and NOT foreclose. They filed her NOD back in early 2009 and nothing since then. Nothing. So if Freddie owns her loan, not the bank, and they only service her loan, who is losing money? Why wouldn't they want to foreclose? Why wouldn't they have worked possitively with the buyers trying to buy the short sale?