Dafaxetentcy: foreclosure homes

In the through the looking glass world of reality according to banks, tearing down foreclosed houses is a good thing. Really.

The spin that Bank of America is using to justify the notion of bulldozing buildings is that the houses in question are worth bupkis, say $10,000 or less. There’s a wee omission in their discussion. Many if not most of the houses in question have fallen in value because the bank failed to maintain them on behalf of investors. They were stripped for copper and appliances, or got moldy, or had squatters move in and make a mess of the place. I’ve heard numerous stories from not only foreclosure attorneys, but also from readers bidding on properties out of foreclosure. For instance, one attorney told me of a house with a $1.3 million mortgage where the owner had arranged a short sale at $1.1. million. The bank refused to take the offer, foreclosed on the house, sat on it, and eventually sold it for, if I recall correctly, $200,000, which I’d bet was the value of the land. The bank made marginally more in fees via this route and delivered a much bigger loss to investors. I’ve heard similar tales from readers greatly lowering their bids on bank owned properties because they deteriorated so much as the process dragged on.

But here is the scam, um, program, via Bloomberg:

Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Fannie Mae are conducting or considering their own programs…

The lender will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. Uses for the land include development, open space and urban farming, according to the statement. Simon declined to say how many foreclosed properties Bank of America holds.

Donating a house may create an income-tax deduction, said Robert Willens, an independent accounting analyst based in New York. A bank might deduct as much as the fair market value if a home wasn’t acquired with the explicit intent of knocking it down, he said…

It’s an economically justifiable transaction,” {P.J.] McCarthy [of Fannie Mae] said. “Holding on to a property that might sell for $1,000 or $2,000 or $5,000 for several hundred days is not in anybody’s best interest.”

The argument made in the article is “No one needs these homes, no one is going to buy them.” But that’s bogus. As reader Justica pointed out,

Last I checked, we still have a large population of homeless people in Chicago, Cleveland and Detroit where they plan to demolish houses. Remember this next time you hear someone talk about how “efficiently” the market allocates resources. This is waste on a monumental scale.

The benchmark should not be the low purchase price, it should be whether the building is a health hazard or in such serious violation of local building standards as to be irredeemable ex very significant investment.

In the days when Harlem was full of abandoned buildings, there were many homesteading programs, some not exactly legal, others whereby people who presented a plan and could prove they had sufficient resources to execute on it could take over an abandoned building (this was for personal use rather than to flip them). These were considered to be positive measures, since they brought in new residents into the neighborhood and improved the properties.

The only good news is that this program is expected to remain small scale. But with 10.8 million homes at risk of default in the next six years, and banks overwhelmed by the volume of delinquencies now, I wouldn’t bet against short sighted bank-favoring expediencies like this becoming widespread.

What do Mel Gibson, Nicholas Cage, Octomom, and Timothy Busfield have in common?

Foreclosure.

Each of these Hollywood stars is well-known and has increased their media attention to include the foreclosure processes of their respective homes.

Unfortunately, foreclosures do not happen in a vacuum, and even the wealthy are at risk.

Actor/Director Mel Gibson

Mel Gibson has definitely been in the spotlight for a substantial part of his life, with most of his fame coming from the Lethal Weapon franchise and Braveheart, and his controversial role as director of The Passion of the Christ. Gibson has already sold two properties for well below the list price and may be losing several other properties, including his church and home in Malibu, California. Gibson has been sued by Rampage Construction for approximately $12,000, but the company previously stated that it accepts foreclosure of each of the residential properties and church to account for the failed payment. The exact stage of this lawsuit is not known at this time.

Actor Nicholas Cage

Along with facing his son’s recent admission into rehab, actor Nicholas Cage has also lost his Los Angeles home to foreclosure over the year. Cage is best known for his performance in a variety of films ranging from National Treasure and Gone in 60 Seconds to Ghost Rider. He purchased his home in 1998 for $6.5 million. After renovations, Cage tried to put the home on the market in 2006 for $35 million and was unsuccessful in his attempt to sell. In 2010 the bank foreclosed upon his property and failed at an attempted auction in April. The property is currently listed on the market for a mere $10.5 million, well below the price Cage was requesting in 2006.

Reality TV Star Octomom

Octomom, also known as Nadya Suelman, is famous for giving birth to octuplets and starring in the Octomom reality television show that followed. Over the last couple of years, Octomom has been delinquent on her mortgage payments numerous times. This time the bank moved forward with the foreclosure process and even served eviction papers last December. Suelman’s father purchased the home in 2009 for $565,000 and eventually put the home in his daughter’s name. In 2010 the foreclosure process began, followed by an eviction notice. Now the repossession is pending on this La Habra, California home.

Actor Timothy Busfield

Busfield is best known for his roles in The West Wing and Thirtysomething. Busfield originally purchased his Malibu home in 2003 for $1.2 million. After a very expensive divorce, he decided to put the property up for sale in 2008, listing it for $2 million. At the end of last year Busfield’s delinquent payments caught up to him and the foreclosure process on his Malibu mansion began. In January, he lost his home to foreclosure.

These individuals are known for their performances on popular television shows and movies; however, now they are also receiving national attention due to their financial insecurity and foreclosure proceedings. Even though these individuals have spent countless hours in front of a camera, they are still subject to the struggles and financial strains that often surface for your everyday Americans.

These instances show us two things: First, the foreclosure inventory is still strong and prospering; therefore, there are countless investment opportunities for new to seasoned real estate investors. Two, the foreclosure crisis is broad and includes not only single and multi-family homes, but also celebrity mansions and estates.

Please like Foreclosure Deals on Twitter and Facebook.

definition of reputation management

Dafaxetentcy

Wednesday, August 3, 2011

foreclosure homes

<b>News</b> In Brief: Atom & Cosmos - Science <b>News</b>

Language Log » <b>News</b> Flash: BBC Admits Error

<b>News</b> In Brief: Life - Science <b>News</b>

No comments:

Post a Comment