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SFace
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2010 Jun 11, 5:38am
What do you think the banks are going to do? Start to foreclose on non-paying mortgage or letting squatters live free?
They will increase staff signifcantly and accelerate the process to reduce squat time. Once you missed a couple of payments and they know the home is underwater, they'll never see another payment again.
They won't reduce principal because the number of owners who can pay, who are paying and who are only moderately under water and paying far out numbers the number who are doing this. As soon as they give in to a few people, they will open up the flood gates to *everyone*. Save a few dollars on these homes and lose on EVERY mortgage, or lose more on these, and not lose on the rest of their portfolio.
I agree with SF ace. They will start picking off the homes that stand the best chance to make them money. They will increase their efforts, but also don't want to flood the market either.
Misstrial
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2010 Jun 12, 1:38pm
Hard to say.
Depends on the state and whether or not legislation is pending to delay foreclosure activity by lenders.
Lenders drank the kool-aid like so many others in the FIRE industries, and imo, they may be wishfully waiting for the RE market to recover, which they think will be sooner than later. They will foreclose then at that time (or so they think).
imo, the RE market isn't going to go back to bubble levels.
~Misstrial
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As I've read the news in recent months, strategic default is on the rise at alarming rate. Banks have been letting defaulted house owners stay in the house for years without paying the mortgage. As the number of squatters increases, banks' loan portfolio performance will decrease. From one of the news articles (don't remember the source now) squatters even demand that the bank reduce principal or take the house. They refuse to pay the mortgage if the bank does not reduce the principal to the current market value of the house. If the banks foreclose on the house, banks take a haircut too. What do you think the banks are going to do? Start to foreclose on non-paying mortgages or let the squatters live free?
#housing