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FortWayne
@
2011 Feb 22, 5:05am
In banking, the traditional logic was always, “the first loss is the best loss†ie move ahead, and dispose of non performing assets as best as possible.
today, banks seemed to have reversed this, and may pay some huge prices for it.1. unpaid taxes add up.
2. non paying owners are unlikely to invest in the home; New roof? screw it let it leak…, dripping sink on the second floor? its not that bad, pool motor out? let it turn green as a duck pond… after all it will be the bank’s problem eventually.
3. theft from abandoned homes. You’d be shocked how many lender owned homes end up missing dishwashers, microwaves, and especially air conditioners.
4. an owner who has left, may rent the home to any kind of crack head renters, since they know they aren’t going to have to deal with it later anyways, the bank will.
Thats our neighborhood.
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This is in response to the article that stated that banks are holding off foreclosing on homes so they don't have to sell there assets at fire sale prices and hoping the housing market will recover enough so they will not experience heavy losses. the problem is the housing market continues to deteriorate, the longer the banks wait the worse things will be in the long run. Sure it makes banks look artificiality good to wall street because they are not taking huge write downs, but a smart bank would be doing the complete oppose. If they foreclosed on all there bad assets now, A. They will most likely get a better price for there assets then waiting when everyone will be trying to unload there assets, better to take a smaller hit now than a larger hit in the future. B. Yes, Wall Street will punish the bank with a significantly hit on share prices, but in the long run, when the bank gets rid of all there troubled assets, they will very attractive to Wall Street in the future. The bank will have little or no troubled assets where other banks will have a mountain of bad assets and with all the banks trying to unload them at the same time, things will get ugly.
#housing