10 November 2008

Monday Musings...
Saw an interesting story in our Sunday paper (Frank Gray-Journal Gazette) about a gentleman that was looking to buy a house. Easy, huh?
Norm Knuth (any relation to Kevin?) was looking to change up from apartment living for the past four years (since moving back to Ft. Wayne) and get a real house. And he's been pre-approved for a mortgage (not that easy to accomplish with the current state of affairs in the housing/lending market). Seems pretty much an "slam dunk", right?
Not really.
After finding a nice house in Wallen Hills on the north side of town that he could see from his apartment window, he'd figure he'd check it out.
The house had been on the market for almost a year (which is about average, given the market today) and had not been sold.
Knuth did some digging around and found that the owner had returned the deed to the BANK, which had approved what is called a "short sale" on the property (this is where the bank sells a house for somewhat less than is owed on it. The bank takes a loss, albeit a small one, and the issue is over and done). Again...seems pretty much over and done with, right?
Not really.
Knuth looked the place over, which had an asking price of $99K, and "low-balled" an offer of $84.9K, figuring the bank would know that was even more than the assessed values, could counteroffer and some middle ground might be reached, and he'd get the house at a price somewhere in the middle of the "asking" range.
Meanwhile, back at "the ranch", another, HIGHER offer (than Knuth's $84.9K) was made to the bank.
No deal was made on EITHER offer.
Knuth found out through his real estate agent that the bank had not even looked at the two offers.The bank sent the house down the "foreclosure pipeline", taking months in that process, at which time the house would be turned over to HUD (uh, oh). And even having HUD sell it would take a few more months after that.
(You can see for yourself the facts & figures)
http://www.foreclosuredatabank.com/hud_homes.htm
Both Knuth and his real estate agent were a little miffed by these actions. Foreclosures take time, create a paper trail long enough to reach to the left coast, and cost some serious cashola in the process.
Knuth figured the bank would want to clean their books of a bad loan and help themselves along the way.
Not really.
And the real estate agent, Joyce Swartz spent time locating buyers for the house, being previously told BY this bank that they wanted to "short sell" the property dictating a minimum price. Then she gets told to "never mind".
Now if there is an upside to this, it's that when HUD places the property on the market, it will be at a BARGAIN price.
The downside to that is that such a sale will DEPRESS PROPERTY VALUES in that (otherwise nice) neighborhood.
Knuth has made an offer on another house.
Now I have to say that it comes as no small wonder that practices like this are allowed to unfold daily in cities across America.
Think about it.
Close to 75% of the time, HUD houses are bought up by people having no vested interest in ANY neighborhood. All they see are potential dollar signs in their eyes. These "landlords" then proceed to fill these houses with as much flotsam as they can, only checking to see if they have the money at the first of the month. I know...I have witnessed it for the past ten years in my neighborhood.
And with such flotsam comes the obligatory crime, and aberrant behavior. The property owner could give a rat's ass when it comes to WHO is inhabiting their properties. It's not HIS neighborhood going down the crapper anyway, is it? It's most likely YOUR neighborhood instead.
Here is another case where that nasty word should be cropping up with increased frequency; ACCOUNTABILITY.
Someone has got to own up to real estate practices like this.
Having a bank take a larger loss to sell the property to HUD when they can get more money from a person with a proven credit history and sensible values and ethics makes NO damn sense whatsoever.
And yet, this practice continues...and neighborhoods learn what HUD is all about. Mortgages fail, banks fail and then get a "bailout", and once again...BAD BEHAVIOR IS REWARDED.
Nice, huh?
Fortunately, there ARE people like Phil Marx that purchase a HUD house with the sole purpose of making it a viable place to LIVE in, and perhaps deter people from not buying other HUD houses, because of a "checkered property history".
It takes courage to want to make things better, and soak money and sweat equity into such a place to make that a reality.
Perhaps it's time the revamp the current system...and this would be a case where true CHANGE would make a difference.
THAT would be the type of CHANGE that I can BELIEVE in.
And in other news:
** Six Devil Dogs put duty first when they rousted some sleeping guests at a Lake Forest CA motel. The Marines were on leave from Camp Pendleton and staying at the American Best Value Inn when they spotted flames and smoke at the facility.
The Marines raced door to door, waking guests and carried an elderly man to safety.
Orange County Fire Chief Kris Concepcion praised the actions of these servicemen, stating no one was killed or seriously injured in the fire.
Now THAT is what real Americans do, people.
Semper Fi.
**Pot...meet kettle, kettle meet pot time.
China is following in our footsteps with their OWN economic stimulus package.
The $586 BILLION is aimed at boosting THEIR OWN domestic spending.
And here I thought everything was ALREADY MADE in CHINA...???
What is there NOT to spend on anyway?
This package will finance programs in 10 major areas: low income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation, and rebuilding from several disasters such as the Sichuan earthquake.
Spending will be increased for new railways, roads, and airports, as well as health and education.
Wow...does that sound JUST LIKE something I heard regarding AMERICA on CNN last week???
China is communist, and we're democratic.
And we have the EXACT same issues and problems.
Who'da thunk?
**Lastly, don't forget about the "blogger sighting" at Glenbrook mall tomorrow between 10AM and noon.
The missus and I will be sauntering about, looking for some pre-holiday gifts, and helping our economy in the process. Here's your chance to play "Where's Bob?" live and in person.
Details were in last Friday's post.
And now you know.....well, some of the news.
(Tuesday - Veterans Day Edition)

5 comments:

indy said...

lol where's bob live and in person. you know i would take you up on the offer. but.....i behoves me to stay in indy. you know the drill the day i leave indy is the day the school will call and say your daughter is sick and needs you now. but i really got bigger fish to partake that day. ;)

about china. i read this a few weeks ago. at one time finance was my main money making goal in life. so i still get excited and read the business part of the web too.

and the hud thing. i saw this coming i just didnt know if it had arrive yet. i plan not to be selling my home. in fact i have thought about just moving out when my daughter graduates and moving in with my man. she can stay here instead of renting and when she wants to move out it will be all good too. i will put it in with a slew of rentals that my man has and he can teach me what to do. some people buy their kids a first car i bought her a first house. she can probley have my car in a year or so anyways when i pick up my almost new next car.

Bob G. said...

Indy:
1) S'OK...you can there "in spirit"..

2) When I first heard this, I was like "OK, so they want to emulate us Westerners"...they should be careful what they wish for, 'cause they sure as heck got it!

3) If you have a house, and most of it's paid off...hang onto it (for now). If you're looking for a house, good luck.
Although there are PUH-LENTY out there, banks would rather LOSE money and wait for their "bailout" than offer it to someone that can PAY FOR IT NOW at a better price.

Go figure.

;)

B.G.

indy said...

pif is my middle name ;)

Tim Zank said...

One of the major problems with a foreclosure which is for sale, is,.......the bank doesn't "own" the mortgage on it usually. They are "servicing" it for a fee from the "investors" it was sold too. As soon as the ink was dry, the loan was sold, and guarunteed by HUD. The bank has no real interest in selling in many cases. That old wives tale about call your lender, they'll work with you, they don't want to foreclose is absolute horseshit. My wife is a mortgage loan officer (14 years) and unfortunately, when the ink is dry, the loan is gone....Most foreclosures are now handled by "assett companies" just slicing off another percentage from taxpayer losses. It's been a fucked up system for some time, I absolutely abhor (and always have) FHA products. They are userious at best. You might get a 6% loan but your APR will 6.9% because of the 4 to 5,000 in FHA bullshit fees stuffed into the loan. The poor bastard pays 100k for a house, and walks out owing $105k day one. Thanks Uncle Sam, Barney & Chris et al.

Bob G. said...

Tim, I agree there are WAY too many "cooks in the kitchen" when it comes to mortgages and lending these days.
Not like in time past when you dealt with either a BANK (or a loan shark...yeah, we had 'em in Philly...and you didn't screw with 'em).

Seems any and all credit card firms, lending agencies...whoever revels in "handing off the ball" to another, and another, and still another group of numbnuts.

I've had ONE credit card account for over 20 years...and the card has "changed hands" 4 times...it even went from a VISA to a MC...!
I was like WTF?
They trade you around like an old ball player..for THEIR gain...not yours!

AT least I still have my $20+K LIMIT on that card (and a credit rating nicely into the "800s", thank you very much)...maybe I'll go out and get me another car...BWAHAHAHA.
Nah...

;)

B.G.