The following problem, that I am experiancing, is going to cause the next big group of real estate holders into default. 3 years ago, I purchased nine condos in a community that has 320 units. While selling the condos, Suntrust bank had a representative, in the sales office, to offer and write mortgages. A large percentage of the buyers used Suntrust as the mortgage holder.To date approximately 75 units have gone into forclosure. Now Suntrust is selling these bank owned units for $115,000. how will a unit owner , that paid more than double ever sell their unit? Even if you were to get a buyer, they will not appraise enough for a sale price above the price the bank is now selling them for.
The problem compounds, because the units in forclosure, can and do, continue to collect rent. But with no outlay of money to pay a mortgage payment , the owners underprice there rental fees and drive down the rental market, forcing owners that are paying their mortage to compete, resulting in a negative cash position for owners that are not defaulting.
Conclusion: Owners that are paying their mortage can not win. They are taking money out of their pocket to supplement the rent to pay a mortgage on a proprerty that is worth less than half of the mortage they owe. They are holding on and will never get back to the original value when 20% of the properties are now able to be sold for more than 50% lower then they can sell theirs.
I believe these owners must confront the bank that helped create this situation and demand a "short buy" also called a princeple forebearance (this is not a short sale) Where the bank lowers the mortage amount owed to be equal to the new appraised value.(That the bank was instrumental in creating} of course the banks position is that if you are not late in your paymenst they have no program to help you. Again , another case of owners that are responsible getting the raw deal. The owners need to take a hard stance and insist that they want some consideration and help.
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