Real Estate Investor · East Lyme, CT · Member since 2008 · 78 posts · 10 votes
18y
Yes I could down load it and yes sounds like it is a massive problem and getting worse.
I probably missed it somewhere but who is
"Bush and Paulsen claim to have a plan to reverse the problem, but that won't fly because most of the defaulted loans are in securitized portfolio's. "
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
Thanks, James, very interesting article. Some great data points in there.
1.1 million loans out of 8.37 million ARMS will be in foreclosure in the next 6-7 years. Anybody really think we're going to see ANY appreciation before 2015? I'll stand by my guideline that the correct price for a property today is 15-20% above what it was in 1999.
Loss on a foreclosure is 43% on a prime loan, 51% on a subprime. That tells me that as investors we should be offering 40-50% below the previous loan amount, and the bank would still be coming out about even. That's a very interesting data point for short sale investors.
There's a huge opportunity for someone to come up with software to make this process easier. However, given the large number of people and organizations involved, what must multiple different systems for handling different pieces (no doubt much of it proprietary), the complexity of the process, and the timeline, I seriously doubt such software can be created and deployed. I've been a software architect for 25 years, and I know creating such software is a difficult task. Just deploying SAP to do the back office processing in a business is a huge effort. All that software is already in place, and the processes are much better understood. So, that tells me that this will continue to be a messy, painful process until its played out.
There was another thread related to this, "hidden REOs". This supports the theory that its neither a conspiracy to keep the REO's hidden, nor incompetence. The people involved are just overwhelmed.
Real Estate Investor · East Lyme, CT · Member since 2008 · 78 posts · 10 votes
18y
Got it.
Yes I have read a number of articles about it (Bushes plan) and have questioned all along weather it would really make a lot of difference. I do not think so.
I believe there is a tsunami of foreclosures coming in 2008. Tighten your seat belt, we are going to be in for one hell of a ride. (or is that crash) I feel bad for a lot of folks but someone has to pick up the pieces and if we can make a difference (for the better) and a profit at the same time helping with the recovery so be it. Do not get me wrong I am not one of the vultures. It is amazing how many of them are out there in this industry as well as the folks who do know what they are doing (but know one told them) and do not realize the caution one needs to have when working with someone else's credit and life especially in the emotional state most people are in when going through a foreclosure. It might be me but I think it is ridiculous when I hear news that the market will start to improve the end of the first quarter of 08. My feeling is it will be at minimum 12 months if not 24 before we see any significant improvement. And thats if we are lucky.
Thats my 2 cents
Scottsdale, AZ · Member since 2008 · 342 posts · 15 votes
18y
Good Article...My investor uses a NPV program for the final test when accepting an offer, sometimes offering 40-50% below the previous loan amount works.
One of the problems that we are seeing as a servicing company is that the asset management companies we are contracted with are not submitting all offers, or they are countering at the original price and the investor takes a hike. Recently, our management requested that we review all offers because it is getting to the point that these properties just need to move!
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
The 12/8/07 issue of "The Economist" has an article about the plan. It cites a figure that a typical subprime foreclosure cost 25% of the value of the mortgage. It has a graph, also shown in the linked article that shows ARM resets increasing and not peaking for another year. Even two years out, the resets are as high as they are now. The text mentions there will be two million resets in the next 18 months.
Another article in the same issue cites a 10.5 month inventory of resales and 8 months of new homes. And a overall 4.5% YTD drop in prices, based on the Case-Shiller index. Certainly, those overall numbers don't mean every market or every street in any market is bad. But, they do paint a ugly picture overall. Or, a good one if you plan on buying houses cheap for the next few years.
If Bush's plan ends up just putting a five year delay in a bunch of foreclosures, this situation may persist much longer than if it was just allowed to sort itself out quickly (and painfully.)
Residential Lender · Plano, TX · Member since 2008 · 1 post · 0 votes
18y
Does anyone know of a way to locate a list of contacts to get access to REO properties from lenders, servicers and wall street firms? Any help would be appreciated?
Residential Lender · Salem, MA · Member since 2008 · 82 posts · 1 vote
18y
that article is definately a great read. many months have passed since it was written. has anything changed at the servicers? are they dealing w these problems more effectively? if they were busy then, they must be out straight right now.
has the market produced any new methods for dealing with all this?