Foreclosed Property Sales Halted?

Remember when we had a liquidity crisis?  When all the banks started freaking out about the mounting losses from crappy loans they slapped together without reading the paperwork?  And then once the taxpayers bailed them out we suddenly had a foreclosure crisis because now they could afford to pay the people to take away our homes?  Remember that? 

Well ladies and gentlemen, let me be the first to introduce you to our latest addition to the American family of crises, the botched paperwork crisis!  (Cue thunderous applause followed by an awkward and confused silence.)

Yes, it appears that a ton of deals to sell foreclosed properties have been halted indefinitely because the documentation to foreclose in the 1st place was rushed through the system and, as such, is full of holes.  So, just to clarify, the mass of issues started by shoddy, unread paperwork used to write bad loans is now being handled by bankers who are writing shoddy, unread paperwork to foreclose.

I’d like to say it’s the blind leading the blind, but I don’t think that’s a brutal enough metaphor.  How’s about: it’s like the criminally insane leading the morally destitute.  That seems to fit pretty well.

So how do lenders respond?  By speeding up any foreclosures they know that they actually can get done.  At the request of wards of the taxpayers Fannie Mae and Freddie Mac, any further delays in foreclosures have been cut short on properties seeking a short sale.  So, if you were a homeowner who fell behind and was working with a real estate agent to try and sell the place and save both yourself and the economy at large the hindrance of foreclosure… well, sucks for you buddy.  Not happening.

And while we’re on a happy note, our nation’s unemployment rate stayed steady at 9.6% as the econ­omy unexpectedly shed 95,000 jobs in September.  Floridians, being the overachievers that we are, currently enjoy an 11.7% unemployment rate.  The Federal Reserve Board has come out with multiple speeches implying pretty blatantly that another round of quantitative easing (printing money) is just around the corner.

I swear, by the end of this we’re gonna end up buried to our necks in cash with no living trees left over.

Mid-term elections continue to heat up.  Most would agree that the Republicans are going to take the House of Representatives in a public backlash against the current establishment due to our economy’s continued weakness.  But just as I was starting to understand the ‘red pill, blue pill’ dichotomy of our political structure, the Republicans have undergone mitosis and spawned a new entity: the Tea Party. 

That is the first time I have used the term ‘mitosis’ in context since biology class, and I believe I de­serve bonus points for it.  I suggest the Democrats start the Coffee Party as their next tit for tat move.  Because who drinks tea anymore?  Or maybe the Red Bull Party.  I could vote for that. 

Finally, I’d like to share with you a lesson in hypocrisy.  The Mortgage Bankers Association, one of the top proponents of fiscal responsibility in our nation chose to strategically default and walk away from their promissory obligations when their new headquarters building went upside-down on it’s mortgage.  So, it’s not okay if YOU flush your faltering assets and bad debt, but it’s okay if they do it.  Because, you know, they were the ones who got you there in the first place.

If I weren’t laughing, I’d be crying right now.

3 Comments

  1. I am not surprised and am not sorry for these banks at all!! the time it takes them to make a decision on a short sale is ridiculous. They have no set of set rules to process short sales and never mind foreclosures. The inexperience people I am dealing with is unbelievable. Can you imagine – a deal falls through and you send the back up offer excatly with the same terms, price and closing date and they tell you they have to start the file all over again which means more loss for them and a higher chance the property will end up in foreclosure. Another situation – one negotiator will ask for a promissory note for a ridiculous amount and the seller says “no”. The property goes back on the market – get another offer – goes through the process but now they do not ask for a promissory note because it is a different negotiator. Now explain that to me!!! I have made a good living with short sale listings but I know I work very hard to close them but it is definitely not easy and I have a lot of stories to tell of the way these short sales are being mishandled!!!

  2. Iris, you’re 100% correct. I’m at the point where I tell buyers flat out not to bother with them unless there are compelling reasons to take a chance (or there are no foreclosures available to substitute). Kudos to you for trying for so long. Personally, I’d rather stick needles in my eyes.

  3. Being on the financing side of things, I have a unique ‘outside looking in’ perspective on all of it. Until some kind of standardization comes to the distressed side of the real estate market, we will wallow in a negative feedback loop to the great expense of home prices and, ultimately job creation. Until then, all of us in real estate must work twice as hard to earn our keep and keep our clients sane.

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