HomeRun Homes Rent to Own Homes Blog

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HomeRun Homes is a centralized marketplace which helps people Find or Sell a Rent to Own Home, both Nationwide and Globally to the thriving Rent to Own Market. http://www.lease2buy.com

August 9, 2011

Really? They Are Doing THAT To Foreclosures?

Hi Folks,
   Happy Wednesday to you.

   As some of you may be aware, when a person cannot afford their home, it's very easy for late payments to start accruing, and the bank letters come, and all of those other ugly things.

   Before that, a homeowner can try and bring their mortgage current, do a Rent to Own, along with a few other salvage techniques. Ultimately, they may decide to short sale the home, if the price of the home is less than the outstanding mortgage(s). Additionally, they can walk away, and the home will ultimately go into foreclosure. At this point, it remains on the bank's balance sheet as an REO (Real Estate Owned), and the bank uses agents to try and sell the homes to recoup something to cover the losses.

   But this raises the question...what about the "Orphans"...the homes that won't even sell at substantial discounts. What do the banks do with these homes? Bulldoze them!

   "Increasingly, it appears banks are turning to demolition teams instead of Realtors to rid them of their least valuable repossessed homes", which comes from an article aptly titled, "Bulldoze: The New Way To Foreclose", written by Stephen Gandel for Time.com. As Gandel writes, "There are nearly 1.7 million homes in the U.S. in some state of foreclosure.". Now, with the market laws of supply and demand, if there are too many homes on market, prices stay low. Gandel poses the question, "But what if some of those homes never hit the market."? This could be good for the market.

   Just recently, per the article, Bank of America (BofA) announced "plans to demolish 100 foreclosed homes in the Cleveland area.", and most of there homes, according to a BofA spokesman, are "worth less than $10,000". How many so far? Approximately 100 in Detroit, 150 in Chicago, and more cities slated by end of year. It's not just BofA...Fannie Mae, Wells Fargo, and JPMorgan Chase were also mentioned.

   Why is this good? Who does this help?

   It's good for the banks since they no longer need to pay tax and upkeep, writes Gandel. They might even get a write-off for the donations.

   It's good for the local governments since they have the land donated back to them, and they get to develop it or use it as open space,

   The story says that "Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all", which would drop prices (supply/demand).

   Gandel writes; "we are at the point where banks would be better off knocking down houses that reselling them", and adds that this shows there is "still something very wrong with the housing market." I find it very encouraging that banks are thinking outside the box to stir things up. What do you think?

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Have a Great Week, and Happy Rent-to-Owning !

Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #REO #foreclosure #shortsale #renttoown #repossessedhomes #mortgage

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