If you’re in foreclosure and have spoken to your bank, you could possibly feel you are being ill-treated. This mistreatment comes in the form of not returning calls, short answers on the phone, and advice that may not be in your best interest. The dilemma is that the bank perceives you are usually in default on account of something you probably did and under the terms of the mortgage, or deed of trust, it’s your trouble. This sometimes insolent approach penetrates the banking industry and produces it hard for an easy resolution to your foreclosure. This is typically, why property owners believe that banks desire to take their homes, especially when there is equity in them.
Actually, the bank does prefer to have the equity from your property if there is any. In the recent real estate market declines, this is not fairly often the case. The sub-prime crisis has triggered the collapse of many banks that were disobliging with borrowers who were sold residences they couldn’t come up with the money for through the use of Adjustable Rate Mortgages (“ARM’s”). The larger issue is that the banks have to manage so lots of individuals who have numerous stories that they have become anesthetize towards homeowners’ individual circumstances. More significantly, the banks are in business to produce an income, so sadly which means helping foreclosure victims is only secondary to what is in their best interest.
The banks generate income from both interest differential on their loans, as well on the points charged at closing, or the advertising of their loans for a profit. How many people do you know who have had their lender changed after they received their mortgage? The number is extremely high because there is a lot of money to be made in showing off and repackaging these small loans into multi-billion dollar bundles.
If a bank has to obtain a property back from a foreclosure or perhaps a “deed in lieu of foreclosure” it becomes a Real Estate Owned (“REO”) property for the bank. This is now an issue due to huge jump in the cash reserves the bank must have by Federal Reserve requirements. So normally speaking, the banks don’t want your house except they can quickly sell it and produce a profit. The minute a home-owner is 90 days late the banks apply computer programs to see if your property has equity and they even send out a realtor to do a Broker’s Price Opinion (“BPO”) to see its value. If it has equity that the bank believes makes it quickly salable, you may be dealt with in a different way. than a homeowner that has no equity. This “equity stripping” of the home is not a foreseeable source of revenue for the bank, but when it becomes untaken, the bank has a “commitment to its stockholders” to benefit from the situation. Within the southeastern states and California, this was a common practice for years when there have been rapidly rising markets.
Some banks became pro-active in trying to facilitate homeowners by sending out field reps to look at their personal situation and suggest solutions. Though, the programs we have experienced required the lender’s agent to be a licensed realtor which caused a arguments with his wanting to list the property for the higher commission versus the small fee for having the homeowner fill out a form and getting an answer from the bank that assigned the homeowner to keep his home.
In summing up, the bank has motives to ill-treat the homeowner. Most banking companies will not be in the business to try to steal homes from foreclosure victims but when the chance avails itself, it is a real prospect. Banking institutions is not going to offer homeowners legal suggestion especially if it is not in their best interests. As a result, the homeowner must know about what questions to ask his bank regarding what packages are available as solutions for his foreclosure crisis. Not at all, sign any papers either from a bank or from someone else without getting the papers studied by an attorney.
Another great article by Remax North Bay
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