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Are the Banks and the Fed helping or hurting the Real Estate Market?

By
Real Estate Agent with Keller Williams Realty Everett

So, the Feds are going to bail (and have bailed) out the banks.  They have given them money to cover their bad loans, have taken over Freddie Mac and Fannie Mae.  Now they are talking about buying the mortgage backed securities that no one else wants.  What is that doing to the real estate market?

I don't have an economics degree, am not an expert nor am I an executive in the banking industry, but I DO have an opinion.  What am I asking are merely rhetorical questions and statements of how I would act if I were in the position of the lending institutions.  I speak from my daily experience of interactions with banks on different levels and their lack of action.

As an agent representing both buyers and sellers in this real estate market, I personally have 2 short sale listings and am representing buyers on 3 REO or short sale properties.  Here is my experience that causes me to question the lenders motivation to act.

With short sale properties, have you noticed that the lien holders are less than responsive to you, the agent or even the "professional short sale negotiators"?  Do you have an offer placed on a short sale porperty or REO property?  Have you noticed that the banks are not responding to your calls for action?

Let me ask....If Joe owed YOU money and he obviously couldn't pay all that he owed, would you take what you could get and call it a day?  I would. What if you got a call from a wealthy neighbor who said "I know that Joe owes you $200....and he can only pay you $100.....If you take the $100, you are done and you will lose the other $100...BUT..if you refuseto take what Joe can give you and wait, I will give you the whole $200...What would you do?  So much for short sales, huh? Rather than accept what I can get, I'll foreclose, cry to the FED about my losses and get paid.....It doesn't matter that when I made the loan, I got paid 6 points up front (it was a hard money loan), charged usurious interest rates and made money on the prepayment penalty...

So, to me, it seems that our lending institutions are motivated to do NOTHING to close our short sale properties because they are waiting for the saviours in our federal government to cover their losses...so once again, WE, the general public, are the ones left hurting.  Isn't it a shame?  Shame on us for buying when we couldn't afford it, shame on the banks for making the loans that they shouldn't have and shame on the federal government for not holding the banks responsible for their own actions.

Caroline Chai
RE/MAX Realty 100 - Diamond Bar, CA

As a fellow real estate agent in the frustrating short sale maze, I am glad someone is speaking up our frustration.  Bravo to a great post.

Dec 17, 2008 09:02 AM