Why Can't We Trust The Big Banks?

Not only did the government bailout some larger banks by simply handing over millions of dollars and then not even making the banks accountable for it (since a percentage of it went for executive bonuses), but now more and more keeps coming out about the mess these banks have caused. And continue to cause:

http://www.reuters.com/article/2012/01/26/us-usa-housing-mortgage-reincarnation-idUSTRE80P0SJ20120126

However, those in the real estate community can't afford to sit back and wait and wait and wait to see if these banks, such as Bank of America, ever decide to get their act together.

Agents, mortgage brokers, and others who have regular contact with clients, should be alerting their current and potential clients about what can be done to keep on top of a home owner and potential home buyer's current mortgage situation.

If it were me, I would want my clients to know that I would help them to be certain that nothing like what is happening to the people profiled in the above linked article could happen to them. Then, I would make potential clients aware that I would be on the lookout for them.

Consumers need to start seeing that those within the industry are making an effort to improve current conditions regarding financing. Yet, a percentage of realty agents seem to forget about keeping in touch with past clients on matters such as this.

Paint the picture, if you are a realty agent. Suppose you do some digging, and find out a home owner is in trouble over an expired mortgage (such as happened in the article), and you alert your client and help him/her/them straighten the mess out. Can you imagine the referrals you would gain from that? Rather than imagine, start checking around.

Everyone needs to evaluate what bank or banks they do business with, mortgage or not. If the likes of Bank of America and Wells Fargo are struggling with 6 figure transactions, how much attention are they paying to your $5,000 checking account?

How Banks Can Turn Around The Real Estate Market

It’s one of the first marketing and public relations tips a young person learns. Do your best to turn a negative into a positive. That thought should be in big, bold letters in every banker’s office in the country.

There I was reading more less than encouraging predictions for the real estate market last night. About how the banks continue to slow down the foreclosure process, claiming it is because of the government’s mortgage modification programs. Whether or not such is really the case or if certain bank executives are too busy counting their millions in bonus money I don’t know. But I do know that this is the single most damaging element to the current real estate crisis.

Considering how the government handed over all those millions to several large banks instead of paying back thousands of specific loans, it is up to these same banks to make the sales of foreclosures the number one priority.

If you wonder why I blame the banks as I do, there is a quote from a Chief Economist at Standard & Poor’s in Banker & Tradesman saying that “The time it takes to do a foreclosure has doubled” in a story published earlier this very week. This is a lot worse than banks with one teller and 10 people in line, and our usual service gripes.

Those few consumers or investors with enough funds and/or secure enough employment to risk purchasing a residence don’t care if the next great deal is a foreclosure or a desperate seller with other motivation. They want a good deal. But if the banks are stalling the sale of foreclosures, it really means that those homes which are not under foreclosure seem “higher priced” to a potential buyer and thus less appealing.

Suppose the banks knew they should thank their lucky stars the government handed over the millions to keep them in business and got serious about helping the economy. And they made it so that homes under foreclosure were EASY to purchase and quick to close. That would entice the investors and potential buyers to get in on the best deals first, while they last.

As foreclosure homes start to sell at reduced prices, it would raise the number and percentage of available homes sold. If several homes under foreclosure in the same community were to sell within a short period of time, that would create a demand for homes in that area. Now the lowest priced homes have been purchased, and that opens it up for the most motivated sellers to adjust their pricing to be the next sale.

However, as long as the banks play the stalling game and degrade the sales of foreclosure properties, home values across the country continue to plummet and millions of current mortgages stay under water. While the banks continue to raise service fees for consumers and businesses and sitting on their foreclosures, they could be taking the lead to stimulate this economy. Here’s hoping they get the message and get aggressive about finding buyers for their properties. Quickly. Or renting them out for a monthly income. Before it’s too late for them, and for us.

Foreclosures are a negative, but I see the way to turn them into a positive.

Bank on this one............

Some banks and S & L's, including large ones, have been closed and/or taken over as a result of faulty and defaulted real estate loans.

In an ironic twist, there is a story making news about a Florida market having to deal with buildings which once housed a prominent local bank going unused, and stuck with tax assessments and other funds owed.

http://www.bradenton.com/business/story/1154871.html

This story has a scary element to it, as well as a funny one.

Personally, I see this as a management issue. Before this particular bank went belly up, maybe the matter of the buildings they owned, taxes, and the real estate obligations of the bank itself should have been dealt with. Now, this has become a blow to the local economy.

There are those who believe, as I do, that the best solution to the real estate crisis would have been for the government to specifically pay off each of the defaulted loans directly, rather than in the form of a bailout.

If local government can't handle the effects of losing a once prominent local bank, then chances are the money handed out via the "bailout" plan will be just as mismanaged by our collective elected officials.

The homeowners or loan owners that defaulted have already suffered the consequences. But if the government has "bought" those loans and owned the properties, the banks that loaned on them would have survived - and undergone immediate policy changes so this wouldn't happen again. And specific people would be responsible for wisely maintaining the continuing existence of these banks and lenders.

Ah, what might have been...........

Don't Stop Short

I've been hearing it all week from realty agents and mortgage lenders. Now it seems the banks are, understandably, waiting for their government money to help bail out the mortgage crisis. However, this is not without short term effects.

Some of the investors ready to cash in on a bargain have lost out to even lower offers on homes entering foreclosure. Now that it appears the banks will receive additional funding, some of these banks are rejecting the "even lower" offers because they will soon be able to sell for even more with government funding.

This means that for right now, the "short sale" is again a thing of the past in many instances.