There’s a been a lot of talk since May of this year of banks supposedly holding onto REO (bank owned properties), and of them selectively releasing this inventory to somehow control pricing.
I think that’s a bunch of crap. These bankers are generally risk averse, and would dump their inventory prior to another bank dumping theirs. However I do see that the number of properties auctions that are postponed exceeds what would be considered normal. Probably more than 90% of auctions are postponed. Why? Well after discussions with Senior Vice Presidents of Wells Fargo and attorneys and others involved in short sale negotiations, at the California Association of Realtors (CAR) Show about 4 weeks ago, I learned it’s because the Obama administration has encouraged (coerced) the banks to try to make a loan modification work. My guess is that the administration also doesn’t want taxpayers to go homeless during the holidays.
However all loan modifications right now are being approved on a business decision basis. It must be that the Net Present Value of the modified loan exceeds what the investor (the bank is generally just a servicer) would get from a foreclosure sale. There are no free lunches, just free postponements of judgment day. The bank executives said, don’t be surprised if the Obama administration comes up with another program which forces the bank to not apply math in their decision making process in January.
There are so many qualified buyers here in California ready, willing and able to buy. I wish President Obama, would the free market do what it knows how to do best.
SUNIL SETHI REAL ESTATE
Sunil Sethi / Broker, President, REALTOR, MBA, CPA / SUNIL SETHI REAL ESTATE
38750 Paseo Padre Pwky Suite B3 / Fremont, CA 94538
Main 510 388 2436 / Fax 510 431 9046
CA DRE#: 01173766