What's Happening in the Foreclosure Market Today?

Question

Hey all . . . I had a few questions that I was looking for your insight on.  Please feel free to share your thoughts on the various subjects.

1 - Are you seeing a settling of prices in foreclosures (REOs)  right now?
2 - Are banks letting their inventory loose or hoarding it?
3 - What types of properties are showing up at courthouse auctions these days?  Are most of the homes so far underwater or lien-ridden that they are not buyable in auction format?
4 - Where are the best foreclosure bargains?  (Or are there any?)

I hope to hear your feedback!

Account Closed · Answer

Most of the institutions are in a holding pattern waiting to see what is going to happen with the PPIP program. (So Hording) Realty Trac reports some 40+% of REO's are not listed or being offered in bulk sale. (Don't want to flood the market and further reduce values)

Rich Weese · Answer

Adrian,
     I deal personally with banks in Tx. In my area, FNB handles their own foreclosures for 90 days WITHOUT listing them. Each FNB has 90 days to sell their own foreclosed homes. They have a poster in the lobby with pics and price etc for everyone to see. If it is NOT sold within the 90 days, it becomes listed by a centralized agent and the commission  comes out of the income derived by that branch. Motivation to sell...
   Lonestar bank sells their foreclosures from a centralized location. Ismael Martinez is the seller and does a great job.
     Other banks have their own methods. I know of NO bank  in TX that is "hoarding" properties. That would be stupid for them. Less money to loan and more reserves required. Not in their best interest and they aren't doing it here.

Jim Wineinger · Answer

I am interested in this simplistic synopsis of the banking system.

1. Depositor deposits their money. 
2. Bank uses the deposits to go to the Federal Reserve to get a loan. 
3. Federal Reserve gives bank a loan (up to 12x deposits) 
4. Bank lends it out to borrowers 
5. Borrowers pay back the loan. 
6. Bank pays off the Federal Reserve loan (keeps a little as profit, has the ability to pay back the depositor their deposit.)

From what I remember the way things were supposed to work the banks lend out the money of their depositors to earn interest.

They are required to keep a percentage of those deposits on hand at all times. When the deposits are going to go below that percentage they then go to the FDIC and get a loan.

They do not simply get a loan of XXX times the deposits just because they have deposits. This was done to prevent a bank from becomming "insolvent" because of a "run on the bank".

Please correct the memory as this has obvoiusly changed since I looked into it several, several, several years ago.

Adrian Pillow · Answer

Rich would you care to expand on this comment:  
>Again, just because a property is foreclosed and not "offered for sale" doesn't necessarily mean the lender still has it. I buy many homes directly from the banks before they list them.<

I am curious as to how you do this.

FWIW in our area the banks are sitting on a lot of inventory!  Especially with spring hitting the grass in some of the lawns is getting pretty ridiculous.  LOL  The home builders IMO are the ones really pushing prices down just to keep busy or complete neighborhoods.

Thank you,

John Trenton · Answer

I'm in Toronto, Canada and foreclosures (called power of sale here) haven't really started to increase much yet. Our housing bubble is delayed 2 years compared to US...

Jeff Tumbarello · Answer

The banking system is in a systemic faluire. They are hoarding properties. They can not take the writedowns needed to fix the problem. In 2005 I extrapolate the the multiples of money was about 65 to 1 with the off sheet stuff. These guys have quit being bankers and are fee brokers trying to keep a job.

Lee Common · Answer

Rich,

I sent you an e-mail from my Pleasant realty account.

Let's see if we can put something that benefits everyone together!

All the Best, Lee

Rich Weese · Answer

Lee, and vice versa. If you want to ever come to the HOT area of tx, come on down. I don't drink coffee or alcohol(Mormon) but I do drink flavored water! I had a gastric bypass 15 years ago, no pretty much just water. Rich.
p.s. I have a couple long term owner financed homes in San Antonio.

Lee Common · Answer

Rich,

I'm in San Antonio, Texas!  :D

So I'm pretty familiar with Texas policy nothing like Michigan where there is a six month redemption period!  Yea even after the sheriffs sale you can live in the home six months without a payment before they can come chuck you lazy *ss and your crap right to the side of the road!

As far as working short sales I have ways of getting them pulled from the auction (tie um up).  No it's not easy they loose you Authorization to release info twice a week and give you one hell of a run around but good notes and being professional pays off.

As far as the note purchase that's why you buddy up with the trustees and attorneys.  Monitor the legal news and have a subscription to the Foreclosure listing service.

Rich next time your down hear in S.A. maybe we could have a cup of coffee or a beer your choice?

All the Best, Lee

Rich Weese · Answer

Lee- there is a big difference here in TX, the death penalty state!! It is also the death penalty state in real estate. Foreclosure notices are posted on April 14, for example. The sale is the first tuesday of every month, May 5th. I've invited BP members to come watch. I'll be there buying. 
  You have a TOTAL of 21 days before your property is gone. Not a lot of time to negotiate a short sale or a note purchase with the bank,imo.