What Are The Banks Thinking?

Okay i am not a Realtor nor do I play one on TV. I have a lot of respect for what you Realtors do and in this market I cannot imagine the BS you have to go through. Yes on the lending side we have had some nasty hurdles to jump over and hoops to jump through. Okay enough about us let's talk about the banks.

I have several buyers who are out there looking for homes who have made offers on multiple short sale/foreclosure/REOs, whatever you want to call them. My borrower makes an offer the bank of $150,000 for a home that is listed at $175,000 but my appraiser says the home based on comparable sales will only appraise for $158,000. So the bank says no they have to have $175,000 or maybe they come down just a bit. Well unless my borrower has a boat load of money put down there is no way that a lender is going to give them a mortgage for this home. So rather than selling a home and getting a bad debt off their books the bank stand their ground and does not sell the house. Who knows when or if the bank will get a better offer. Heck unless someone comes along with cash it won't matter because the value is not there. Let's not even talk about how HVCC has completely thrown things out of whack already.

So this whole housing, mortgage and economic meltdown thing is nothing new. I know the banks are overloaded with short sales and foreclosures but hasn't everyone had enough time to get something figured out by now? Shouldn't there be some system in place to deal with these homes? I am no financial whiz but isn't getting a bad loan off their books now better than keeping that loan on the books and push things off for later? A client I was talking to the other day had an idea about how to deal with the foreclosures. Rather than modifying a loan why doesn't a lender do the following?

"Mr. Borrower looking over your financials we see that you cannot afford this home but we have another home that is a foreclosure in your area that fits your budget?" So you take someone out of a house they cannot afford and place them into a home they can afford. Now instead of two non-perfoming loans you have one loan that you are receiving payments. This also would help to stabilize the housing prices in areas since you now have less foreclosures. I know there are probably some legal and accounting complications to this but this is some outside the box thinking that could help.

I could go on and on about how the system is definitely messed up right now as I am sure many of you could. I truly wonder what the banks are thinking these days, or are they?

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