Comments on: FRB Speech: Ben S. Bernanke – Challenges in Housing and Mortgage Markets

By: talktotennessee

talktotennessee — Sun, 18 Nov 2012 04:49:54 +0000

Credit very tight here. Trying to sell a short sale to a friend while the agent shuffles two banks and a homeowner plus multiple offers. It is a nightmare and months of waiting and still might not work. The banks really want cash investor purchasers, no questions asked.
Tried to sell a family member a REO. She bid on 4 houses, good bids but never got one, underhanded dealing in the market. Whoever lists these things controls them.
She finally opted for a normal sale and paid more, has excellent credit so no problem. But this is the meanest market I have ever seen. Banks ‘give away’ houses for pennies on the dollar but won’t modify the loan for the homeowner. Makes no sense to me. Is it because so many of these loans are messed up? Are they just charging them off to Fannie and Freddie, the shareholders, what?
I know of one title that was never recorded. Oh, they will try to foreclose on it because we are in a non-judicial state and they will just DO IT even though they have no legal right. I think the admonition goes like this:.
“sue me if you don’t like it”
Lots of luck with that! been there and done that one.

By: talktotennessee

talktotennessee — Sun, 18 Nov 2012 04:38:05 +0000

Bernanke always said it was housing. He knew what caused the recession (depression) but he was never forceful enough to make a believer out of Washington. I speak of both sides of the aisle now including the big house. They continue to let banks pretend they were helping but they never really did.
Housing recovery?
People just really don’t know the truth about “the housing recovery.” As an appraiser I was looking for comparable sales for a short sale appraisal for a bank. These fly under the radar without going through the REO process and aren’t really tracked by the market as distressed sales.
The remarkable discovery I made was that corporations are shuffling houses in bulk. 10-15-20 house transactions. In my database they show up as individual houses with a price on them followed by a T, which indicates this is a multi-parcel sale. The one I was looking at was 7,000,000 for several houses. There are hundreds of these sales purchased by Australian, Chinese, Canadian and many many other corporations set up for this purpose.
Now you say, “What’s wrong with that?”: “Never been against the law for foreign entities to purchase property in the U.S. even if not citizens, right?”
If it were part of the recovery process so what?
These corporations are dealing in these houses much like they dealt with defaul swaps, only parting them out, selling to investors as management packages. The local entities hawking these sales manage the rental, the out of town (country) buyer never sees the property and doesn’t care. He purchased an investment with a return just like the global market purchased credit derivatives.
Watch for the second wave of derelict housing to negatively impact the housing market as these default. There are many many for rent signs on these houses now.
If experience serves you will see these not maintained long term and return to default. The Corporation sheds them like fish scales and moves on, often borrowing money on them in the process boosting the prices. I see transfers within days or weeks that have doubled and tripled the investment.
Like a deck of cards the shuffle goes on and like a house of cards it will fall again. Our government is looking the other way totally. Bernanke’s mild manner belies what he knows and that is why he keeps rates low to let things settle and we are seeing rises now, very similar to the bubble we saw before, just investors with hard money are making the deals.
Watch for another round of foreclosures. I am seeing increases locally, may just be this area.

Oh, by the way, not to worry! The wealthy in this city are taking full advantage of the low rates, buying and renovating investment properties but mainly their own homes. Escalating prices in the high end of town lets you know all is alive and well with the 1%.
.

By: Kimberli Wilson

Kimberli Wilson — Sat, 17 Nov 2012 17:13:49 +0000

When there is an over suppy of homes you do not increase the restrictions on the demand by requiring a 20% down payment instead of 10% down payment. If someone has a retirement or pension and cannot loose their job and have perfect credit they should be able to buy with no money down right now. This is your least risky person to loan to as job security and income are not an issue. If someone has bad credit but can come up with 50% down then give them a loan as you are risking NOTHING with 50% down. The next best person to loan to. They have to sign a Deed in lieu agreement when buying. If they ever get 3 months behind on payments the Deed in Lieu automatically kicks in. In Atlanta recently a report came out that said that homes are sitting empty where the bank went out of business and are just accumulating property tax past due bills. We need to determine what houses do not have an owner and the status of every home for starters. If a bank does not exist for example and the tax bill is more than the value of the home give the home to Habitat so they can fix it up and put a veteran in it and erase the back tax bill (no brainer). Get outside the box and increase the demand you have eliminated all the buyers so you are having to keep the interest rates low so the banks do not want to lend money at 2% because of no profit so now they are laying people off and increasing unemployment. (You do not get it yet). The time to only lend to perfect people is when supply and demand are in balance. You are slowing down the recovery based on a lack of an innovative, comprehensive strategy that “includes” people that are not “perfect” but can make a house payment. Bulk selling and making neighborhoods more unstable adds to the problem and adds a different problem with transient people. You are addressing one symptom by creating a new symptom and neither one address the problem.