Posted on 07/29/2012 8:14:06 AM PDT by Cincinatus' Wife
........Facing an onslaught of pending foreclosures, banks increasingly are turning to short sales. They lose about 15 percent less on short sales than they do on repossessions, which can take years to complete while taxes accumulate along with legal, maintenance and other costs, according to Moody's Investors Service. To encourage short sales, banks are streamlining the closing process, forgoing their right to pursue unpaid debt, and giving some homeowners cash incentives of as much as $35,000 for relocation expenses.
Roadblocks involving second liens are standing in the way of even more short sales, which reached the highest number in three years in the first quarter-133,192 total transactions, said Daren Blomquist, vicepresident at RealtyTrac. While about 39 percent of homes that have entered the foreclosure process have more than one lien, just 4.2 percent of short sales completed in the second quarter-5,658 transactions-were on homes with second mortgages, according to an analysis RealtyTrac performed for Bloomberg.
"It appears that short sales with multiple liens aren't happening as frequently and are taking longer to complete," said Blomquist, adding that when a short sale doesn't go through, the home often ends up in foreclosure.
...The four largest U.S. banks-JPMorgan Chase, Bank of America, Citigroup and Wells Fargo-held 48 percent of the $849.5 billion in second liens as of March 31, according to the newsletter Inside Mortgage Finance. Some banks sell second mortgages to outside investors such as Franklin Credit Management for anywhere from a quarter of a cent to 60 cents on the dollar...
....While Franklin's Axon declines to say how much his company collects on the loans it buys, he said it averages more than the industry standard of 6 percent of the unpaid balance. His company focuses collection efforts on younger, more educated borrowers, he said....
(Excerpt) Read more at sfgate.com ...
The banks pressured to make these ctapy loans knew they were crappy but were forced by government regulators enforcing the “Community Reinvestment Act” (look it up).
***************************************
MaryGonzo ,, you couldn’t be MORE WRONG ... Take a look at the heavy foreclosure areas ,, Florida , Nevada , California ... NONE HAD ANY SIGNIFICANT NUMBER OF CRA ordered loans ... The problem was that with a cost of money at 0% ,, and their risk at 0% because they pre-sold the loans off ,, and the ability to artificially inflate the market with bogus appraisals and by adding to the pool of buyers by lowering standards THE BANKS ARE FULLY TO BLAME FOR THIS CRISIS ...
GROW A BRAIN AND LOOK AT WHAT ACTUALLY HAPPENED.
You spew government propaganda. No one believes it.
Anybody who believes banks collectively lost their corporate minds starting in the '90's without being frog marched into it by Uncle Scam should buy a bridge from me. I have an extra good deal on several.
” In effect, the second lien holder is acting like the first lien holder!”
I wouldn’t put it quite like that. None, or very few of us can say “what the banks are thinking”. Oh, we think we can, and there are some with the industry knowledge to make educated guesses. But I can just tell you, as a matter of learning to negotiate, that in most cases it is a near-fatal error to assume you know the motivation of the other side. Just generically, this is way to mislead yourself.
That said, my belief is that most first mortgages are not held by banks. They are mostly held by Fan and Fred or FHA. They could be stuffable back to the originating banks, but in many, many cases, the paper trail back to the originating banks is questionable if not near impossible to reconstruct.
Many, many second morts, are, in contrast, held by banks. And they are worried about setting the precedent of forgiving them. A second mortgage on a home where the first mort is not being paid and is subject for foreclosure is in 95% of cases completely worthless.
The banks-holding-seconds are interested in being paid, but there’s every likelihood that they will not. But the longer they avoid settling out these 2nds, the greater the chance that some miracle will occur, eg; some gov bailout, some cash-rich investor who will offer at least a quarter on the dollar for an otherwise worthless 2nd, or some unspecificed something. As is, they have ZERO motivation to clear this item from their books since the act of settling for zero marks the asset to market, and FASB 157 allows them to mark the asset to fantasy. If all the banks holding RE loans had to mark their assets to market tomorrow, the great majority of them would detonate on the spot, their statutory capital falling below FDIC limits at once.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
I call them GSA’s rather than GSE’s because now they are being managed and funded directly by Uncle Scam as a result of the real estate crisis.
sorry - more problems with my internet provider, Clear.
I call them GSA’s GSA’s GSA’s GSA’s
Sory, couldn’t resist
“How rude of 2nd position lienholders to want to get paid. Who do they think they are.”
You would think they would forgo the $35,000 relocation incentive and give that to the lien holder at the very least.
That’s the kind of horror story my realtor had been telling me about. Banks that are under no compulsion to act in a civilized manner.
“Pay your mortgage or get out. ....... The banks pressured to make these ctapy loans knew they were crappy but were forced by government regulators “
If you don’t like government regulators forcing CRA, then get out.....out of the “banking” business.
(Or maybe they we’re in on it after all)
Usually the same people that have the first lean.
The whole point of the article is that they are not the same as the senior lienholder.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.