Los Angeles, CA · Member since 2008 · 7 posts · 0 votes
I am looking at REOs in Los Angeles and found one that I liked. It was listed on the MLS at $230K. My agent contacted the selling agent to take a look at it, and the selling agent informed my agent that the bank changed their offer and wanted $405K instead.
What is going on here? Are some of these banks waiting to see if they are going to get bailed out?
A $180K price swing seems crazy to me. It is like they know the true market value of these loans but just don't want to admit it.
Travis, I agree that the banks have not been realistic in many cases on the value of their REO's. I wondered if this bailout was going to further compound the issue since banks now have some renewed hope that they will get bailed out. I suppose that the reality of that remains to be seen.
I agree that this is absolutely crazy. It looks like with every passing day that it is getting worse, in my opinion, as the congress tries to set prices in the market for these terrible securities.
I feel like we are so close to getting to the bottom of this and being able to figure it out.
I mean here I am, about to buy a condo that probably has one of these "toxic" mortgages associated with it, where there was no income verification, no money down, etc. And I am pricing this security/condo at $230K and it WILL sell at this price and I will be able to pay it back, as we are actually verifying my income etc. so my security will actually be worth something.
But with this bailout... I wonder what will happen. So the treasury buys this loan and then, if I am hearing the plan correctly, will wait for the market to rebound and then sell the asset so that banks don't have to deal with "firesale" prices aka the actual prices of these assets. So this condo will sit empty until it is worth $405K again? That could take a decade. Maybe two.
Now, you combine that with dems talking about changing foreclosure law to keep people in their overpriced homes as a necessary provision to get anything passed and wow. Giving people incentives to default on their mortgages can't be good. And giving people who can't pay back loans bigger loans is what got us into this mess. "affordable housing" is turning into free rent, paid for by uncle sam.
Lawmakers may be setting a precedent that inspires thousands of more late payments. Why pay your loan when non-payment leads to a better deal on your mortgage?
Lawmakers may be setting a precedent that inspires thousands of more late payments. Why pay your loan when non-payment leads to a better deal on your mortgage?
Right. We have gone insane.
Pragmatically though, I think buying now might make sense for me as opposed to continuing to rent. I mean, if it all melts down and I loose my job or can't pay my mortgage, it looks like I can pass the buck on to someone else in this new, no accountability financial system.
I heard that these properties will go to HUD and they will be listed the same way HUD currently list them, but then I also heard that they will be auctioned off.