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Showing posts from June 5, 2008

LENDERS BUNGLING THEIR FORECOLOSURES - part 2

The lenders, as a group, seem to be doing a good job at screwing things up even before they get to their orders of foreclosure. They are making it harder and harder for distressed owners to offer compromise or "short sale" proposals. In just the past month, I have seen three contracts canceled in situations where the mortgage holder has taken too long to decide whether to accept a short sale or out-right dis-approved the sale.

Short sales are a necessary and utile solution for owners (and their lenders) where the value of the property is less than the amount owed on the mortgage. The owner, if they can sell for the current market value can get out from under the mortgage obligation without having to resort to foreclosure or bankruptcy and at least minimize the damage caused to their credit ratings. The lender can get back much of the mortgage money lent without having to incur costs of a foreclosure or the time delay involved in a foreclosure.

But the lenders are either unwill…

LENDERS BUNGLING THEIR FORECOLOSURES - part 1

Any looking to understand how and why the mortgage companies got themselves into the financial mess they are in will appreciate the experience a client of mine had recently while trying to buy a foreclosure property from the bank.

The property in question was one of three units in a condominium building. For whatever reason, all three units are now owned by the three banks that foreclosed on the three mortgages used by the three original unit owners.

Each bank undoubtedly made their borrowers covenant to maintain insurance on the condominium common elements. After all, if the building were to burn down, the lender would want to either see it rebuilt or to apply the insurance proceeds towards the loan repayments. Each of those banks also insisted that, in the event of an insurance policy lapse or cancellation, they would have the right to purchase insurance - at their borrowers expense - to prevent such losses. Standard procedure there. No surprises.

BUT, now that the banks took control…