Monday, October 11, 2010

The housing market collapse and foreclosure quagmire

I've been reading the news about various banks (GMAC, Bank of America, JP Morgain Chase, etc.) and the mess their foreclosures are in.  I've got to say is just one word:  Wow.

One of my neighbors got behind on their mortgage because of health related issues.  Their mortgage is with one of the three banks mentioned above.  They will call the bank and ask when they will be foreclosed on.  The bank representative tells them that they need to apply for a loan modification.  They apply and subsequently get denied.  This has happened several times.  Then the bank will call them.  Tell them that they need to pay $10,000 to the bank.  They ask the bank if they pay the $10k if they will get to stay in their house.  The bank says, "This doesn't guarantee that you will be able to keep your house."  The neighbors ask what the money is for and the bank can't/won't tell them them what the $10k is for.  But the bank wants the money.  So out of frustration and disgust, my neighbors are leaving the house.  They know they will be foreclosed on but the bank is unwilling to work with them.  So they are just going to walk away.  So who knows how long that house will sit vacant while the lender goofs around with it.

In order to clean up our housing mess, the country really needs to get these foreclosures done, sold and out of the way.  I personally fear what this foreclosure will do to the property value of my own home, because it will probably end up being sold at about 1/4 to 1/3 less than what is owed on the house.  And that will just kill the value of my house.

Interesting to see where we go with this.  Probably more bailouts.  Or a double-dip or triple dip recession.  Bleh.

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