Foreclosuers up 47% from same time last year
April 27th, 2007 | by mbhunter |“If you owe the bank $1,000, it’s your problem. If you owe the bank $1 million, it’s their problem.”
Foreclosures are on the rise and Rick Sharga, vice president of RealtyTrac, isn’t convinced we’ve hit bottom. (I don’t think so, either.)
So not only are lenders helping out homeowners with risky loans to keep them out of foreclosure, some local governments — Euclid, Ohio, is one — are chipping in to renovate the vacant, repossessed properties to stave off slumping of prices on the occupied homes. (Which means that the residents of those towns are paying for it through their taxes.)
Foreclosures are expensive for the lenders because legal fees and sale fees (auctioneer’s fees) are substantial. Not that long ago lenders would let the properties go to auction because the appreciation was enough to cover all of the costs associated with the foreclosure, and the lender would recoup its losses. Now, that isn’t the case. This is a big opportunity for investors, because the banks are, in essence, more willing to split the difference (to some extent) between what’s owed on the property and what the net proceeds would be from the foreclosure. Basically, the banks still lose (and the investor gets the property at a discount) but the banks lose less than they would at a foreclosure.
In general, lenders with a lot of foreclosures on their hands are still hurting regardless of how they get rid of the properties. And connected investors will be able to take advantage.
4 Responses to “Foreclosuers up 47% from same time last year”
By Finance Guide 101 on Apr 27, 2007 | Reply
“If you owe the bank $1,000, it’s your problem. If you owe the bank $1 million, it’s their problem.” Well said…
By Finance Guide 101 on Apr 27, 2007 | Reply
It is advisable to consider getting in touch with the lender if you feel that you are having a tough time making your mortgage payments. Tell them that you are worried about foreclosure, and ask if there is anything that they can do for you.
By Andrew on Mar 10, 2008 | Reply
Yes, I agree with the fact that if we go for foreclosure we may incure more expenses and have to forgo our property at a loss. So, It is better to discuss the situation with the lender and get the things solved.
By Andrew on Mar 20, 2008 | Reply
Foreclosure is not only a risk to the borrower but it is also a risk to the lender, as they incur lot of expenses while going for foreclosure.
Previously they use to recover all the amount from auction, but now they are unable to do so. I hope from here they may not have any problem.