Buying a home in CA, interesting experience

[momisery]

My step sister and her husband are trying to buy a home in CA. Of course they want a deal, and they are looking at foreclosed homes. This has been going on now for about 5 months. They put in an offer, and the bank sets a date to review all offers, then turns them all down. They have tried short sales, and the lenders never cooperate. They have attempted to buy 7 different houses to date, and have a offer in today on 2 more... So, perhaps the 7 will turn into 9 turn downs by months end?

The homes are vacant, some are stripped, and yet the lenders are letting them sit there paying the utilities on them and taxes instead of selling them. I would say they have enough money in banks if they can afford to do that.. geesh.. I just thought this was a bit interesting, when they have a buyer they still will not give in. Many have tried to modify loans, or short sale them, or even do DIL.. but the banks will not budge.. are they looking for another tax payer bail out? lol.. I hope not..

[OregonMom]

I am not sure what the banks are waiting for, my mom was going to shortsale her house, had a buyer with $50 grand down and wanted to pay $225K for the house. Bank said no, it went into foreclosure and they eventually sold it to someone else for $203K. Bank lost $23K on that deal.

[catleg]

The point of the lesson is that the banks don't have enough capital to absorb the loss. They are scared sh*tless of driving prices any lower and triggering a larger wave of defaults.

There will be better chances to buy once the tax credit expires (April?) and they start liquidating some of the Fannie/Freddie inventory later this year.

[Overmylimit]

Bank lost $23K on that deal.

Trust me the bank lost nothing, I live in the city that was the 1st #1 foreclosure capital of the U.S. in Calif so I've been seeing this go on for quite awhile.

People who are being foreclosed on can't figure out why the house they owe 300k winds up selling for 100k and they couldn't have just modified down to that amount and stay in the house? because the bank has insurance for the difference....they will take their time getting the house sold then they turn in a claim for the lost money on the loan...

[albacore44]

.they will take their time getting the house sold then they turn in a claim for the lost money on the loan...

And who do they turn that claim into..............why AIG of course, who also was the largest receiver of TARP money...........why ?? Well you know the answer.

[Overmylimit]

Exactly my friend, exactly... most people can't figure out why an insurance company has financial trouble since they make a ton off of premiums. Ahh but when you have a meltdown and claims come poring in its like a run on a bank

[albacore44]

Exactly my friend, exactly... most people can't figure out why an insurance company has financial trouble since they make a ton off of premiums. Ahh but when you have a meltdown and claims come poring in its like a run on a bank

BTW- had an interesting chat with a friend of mine down in San Diego, a realtor who sells only Short sales, and forclosures directly for the banks.. she told me its gotten very slow because the banks are holding 7 million forclosures back, off the books , but they should be releasing some soon. she told me the banks are trying to force people who are in trouble to sell, becuase they dont want to forclose, because they lose more money......find that hard to believe, from every thing else i'm hearing, but she was sure of it.

[Overmylimit]

I know for a fact they are holding back all these units, i have a friend who works for BofA and he said they have so many units that if they put them all on the market the price would be driven down to pennies on the dollar. this is why the bailout shouldn't have happened, we are prolonging the pain. When they gave the banks all that $ then the banks could wait it out...

Sometimes its better to bottom out and then rebuild......hey like most of us here why doesn't government/big business have to follow the rules like us.

IF ONLY i could run my business like California runs....oh I have a shortfall in funds this month.....write another check!

[Overmylimit]

Oh I forgot to mention though, they have insurance on those units too

[mtbc]

I wonder if also not selling the home at a loss lets them keep it at an artificially high value as an asset on their balance sheet, that they can use on paper as leverage to maintain a reasonable capital ratio and not have to further collateralize to back their liabilities.

[Overmylimit]

I wouldn't doubt it, they are going to do whatever makes hem the most profit

[catleg]

Pretty soon banks will be burning down houses for the insurance money.

[Overmylimit]

Pretty soon banks will be burning down houses for the insurance money.

If they could get away with it I'm sure it would happen

[BigJohn]

As for buying a repo home - I would give it a lot of thought. In my area, if the building has been vacant for 6 months, it has to be reinspected which can lead to another can of worms.