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The Reason Why Banks Are Slow to Respond to Foreclosures

By
Real Estate Agent with Elizabeth Anne Weintraub, Broker DRE #00697006

foreclosuresThe banks are taking a long time to decide on foreclosures for one reason: They can't do it any faster. Many asset managers are handling 500 files per month. The banks are overwhelmed with foreclosures and understaffed. Not only are they dealing with potential sales, but there are a flood of other homes in foreclosure that need to be listed and put on the market, in addition to tons of others receiving notices of default.

Banking insiders -- sources that I cannot name -- have told me the banks are withholding foreclosures from the market and releasing them when inventory begins to dip. They are allegedly withholding these bank-owned homes to drive up prices on their existing inventory. If too many homes hit the market at one time, competition will dwindle and prices will plunge even further.

It's like juggling ten balls in the air. These banks didn't expect the foreclosure crisis and are ill-prepared to deal with the mounting number of foreclosures. This is not in defense of the REO lenders, it's just the way it is. If buyers want to buy bank-owned homes, then they work within the confines of the bank's limitations, and smart agents will write contracts with 45-day closings instead of 30.

elizabeth weintraub sacramento real estate agent in land park

The Short Sale, from Archer Ellison, coming January 2009.

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

Comments (19)

Debi Boucher
Real Estate Showcase Photography - Woodland Park, CO
"Realtor Showcase" - Real Estate Photography/Virtual Tours

With all the people out of work these days, they might consider hiring more staff! LOL

The whole thing is a mess....hadn't heard about the withholding homes from the market scenario. Thanks for the info.

Sep 25, 2008 04:00 AM
Scott Cowan
RE/MAX Professionals - Olympia, WA

I was going to say the same thing. Hire more staff on a temporary basis. Perhaps homeowners who are in danger of losing their homes. It would help the banks and the borrowers. Who knows it might be the best form of education for homeborrowers to have to work in the industry and see the process?

 

Best,

Scott

Sep 25, 2008 05:02 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Debi: I fixed the multiple messages for you. Next time, just click your home page and start fresh clicks back to where you were, and you'll probably see it has posted. Server issues, ugh.

Hi Scott: Banks are laying off, not hiring. Some hire third-party vendors to process paperwork. Personally, I'd rather sit on a hold a bit longer than deal with somebody overseas. Gives me more time to play Bejeweled.

elizabeth weintraub sacramento real estate agent in land park

 

Sep 25, 2008 05:16 AM
Erin Newington
5305573559 - Grass Valley, CA
Sierra Foothills Realtor

That is good information!  It does make sense but could be a gamble with our current economic times.

Sep 25, 2008 05:16 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

It's not the banks that need to hire more people it's the REO assett mangagers.  And really even temps could help set up files and make copies and lighten the load they are currently handling.

Sep 25, 2008 05:27 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Erin: I've closed a bunch of REOs this year, and every single one of them is different. Patience is supposed to be a virtue, but I don't have a lot of patience. Whining never helps, though.

elizabeth weintraub sacramento real estate agent in land park

Sep 25, 2008 05:29 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Tammy: I think they should tap the intern market. There are always bright and able high school / college kids who can help out for free.

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Sep 25, 2008 05:31 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

The problem is that they need the training. With so many people getting out of the Real Estate and Mortgage business, there should be some that would qualify in the asset management business.

Sep 25, 2008 06:32 AM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Elizabeth. beyond the banks limited staffing resources, this sounds like playing games with supply and demand to keep the selling price potential as high as possible. Thanks for your insight.

Sep 25, 2008 06:45 AM
Jessica Bigger
Bigger Communications - Reston, VA
Freelance Real Estate Business Writer

Elizabeth - Another thing I've found in support of writing an offer with a 45 day escrow is to give the buyer's lender enough time to get the loan through and to be able to have some extra time to work things out if there is a problem on the lending side as well.  So I think it benefits both parties (unless maybe the buyer is a cash buyer).

Sep 25, 2008 09:51 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Fred: But if they can't afford to pay them, it doesn't really matter. Regardless of how people may feel about the banks, the fact is they are losing money.

Hi Gary: They ARE playing with supply and demand. If you were in their shoes, would't you do the same thing?

Hi Jessica: Isn't that the truth! So often there are problems with the buyer's loans. Especially FHA buyers. That's why when I come in with a conventional buyer on an REO, I always beat out the FHA buyers.

elizabeth weintraub sacramento real estate agent in land park

Sep 25, 2008 11:07 AM
Anonymous
Anonymous

Elizabeth... Great post here.. I'm afraid it is going to get alot worse before things even start to get better.  From working the short sale market, I can see the back log they have.

Sep 25, 2008 02:11 PM
#17
Sherry Scales
Austin Texas Homes, LLC - Leander, TX
Realtor, for Austin, TX and surrounding areas

I know two people who are asset managers. They started them with 500 files. They both have around 1600 files each right now. With the Fannie Mae/Freddie Mac thing a couple months ago, they put a hiring freeze on...They are totally slammed!

Sep 25, 2008 02:20 PM
Steve Brigham
Prudential Rand - Middletown, NY
e-Certified

Short sales are becoming more frequent so we need to get used to it and educate ourselves so we can adapt to the change in the market.  I agree, the banks are overwhelmed with their workload but they are a major reason why we are in this situation.  It is going to take some time to dig out but we will get out of this mess and better days are coming.

Sep 25, 2008 02:26 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Sherry: As if 500 files isn't bad enough, to more than triple the workload is crazy. Say, I'm still putting together the last chapter of my short sale book. If you have an interesting story to tell, feel free to email me.

Hi Steve: Better days may be coming, but they might not get here soon enough for some. JP Morgan may not save WaMu. The fed bailout may not solve the mortgage crisis, either.

elizabeth weintraub sacramento real estate agent in land park

Sep 26, 2008 01:24 AM
Jeanean Gendron
The Address Realty - Redding, CA
Specializing in Selling Unique Properties

Elizabeth, thanks for this perspective...I have to say I've been puzzled why it take so long for them to get them on the market. Very interesting!

Sep 26, 2008 02:08 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Hey Elizabeth...Of course they cannot release all the homes at once...further devaluing of the current markets hurts the banks more than it hurts the individuals...If you don't need to sell, then just go on with life...if you do need to sell, then this is the worst possible time to do that, but flooding the market with another 10,000 homes a day will create another dynamic. By the way, the 10,000 number is the amount of new homes that hit the foreclosure list EVERY DAY...

I think that Realtors should find the REO lists in thier area and sell them..they are ready to close and have clear titles...

Sep 26, 2008 02:27 AM
Linda Jandura
Raleigh Cary Realty - Apex, NC
Realtor, North Carolina Buyer & Seller Specialist

Good morning Elizabeth,

Interesting post, didn't know the banks were holding back on listing homes, but that only makes sense from their viewpoint.  Yes, it would be great if they hired more staff, but they're losing money as it is with all the foreclosures, so of course they have no money to hire.

We don't seem to see a lot of foreclosures listed on our MLS, now I have a reason to tell our clients why they're not seeing a flood of them right now.

Thanks for the info, as always.

Sep 26, 2008 03:23 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Jeanean: Getting them on the market is time consuming. They have to hire an agent, get a BPO, run a desktop appraisal, make repairs, clean it up and then make sure they aren't dumping too many of them at one time, I suppose.

Hi Mike: Most of the homes that go into default do not go through foreclosure, so the number of foreclosures filed can be pretty misleading.

Hi Linda: Maybe you'll be one of the lucky areas without too many foreclosures, but I don't know if there are isolated spots of the country that are spared from this crisis. It's so easy to walk away nowadays that people see it as a viable solution instead of a last resort.

elizabeth weintraub sacramento real estate agent in land parkelizabeth weintraub sacramento real estate agent in land park

Sep 26, 2008 04:07 AM