Wednesday, August 1, 2012

Foreclosures on All Sides

An abandoned home

This is sold, but just now, every type of home and property is available.

    I have concluded in the last few weeks that a foreclosure is a very strange thing, a bit like a tornado, or some other type of bizarre storm.   All homeowners were told, or should have been told at closing, that their home is recorded in their county,as their own, but that its ownership can be transferred to the bank or entity which lent them that money for its purchase, and that this can occur as quickly as three months and fifteen days past the time at which you paid your last payment, if in fact, you cease to make payments..   Your home is yours unless you can't make the payments to the bank, which include their payment (principle and interest), property taxes, and your homeowners insurance. (Now some additional rules have been added which slows the process.)
              Our first way of viewing a foreclosure was in our daughter's purchase of a government foreclosure. The parties were in default on a loan our state made to them on which they had never once paid. From that standpoint alone, foreclosure seemed like a wonderful thing.  She picks up a house for must less than it's appraisal because it needs some basic cosmetic work and a great deal of cleaning......oh, and a stove and some major appliances.   Our daughter has friends from college who were foreclosed upon in one state, and then SOMEHOW rather rapidly found a loan in this state, and happily adjusted to their loss.
               In a normal economy a foreclosure in our county only very rarely occurred. When it did, our local lawyer and our builder would buy the houses, refurbish them, and promptly rent them out.  This was the only source of rentals in the entire county, and so, this rare occurrance actually met a need.    Now, things are very different.    Now, in any one given week, there are multiple foreclosures. Because they are rural properties and often include land, most of them range from the total note having been anywhere from $349,000.-over a million dollars.  Our daughter's was a different situation in that her home cost much less to acquire.  Since the numbers alone make foreclosure a slower process, and scandals for robo-signing and rushes to foreclose have been in the news, foreclosures still commonly occur, but take more time to occur than they did previously.  In addition, some new laws have been added. Among two items, banks are not supposed to foreclose on someone who is active duty military, and so this puts off some foreclosures.  They also are not supposed to foreclose on someone who is actually dead, without making proper attempts to locate and serve the paperwork on the heirs, and waiting additional time, as well.  Still, even with these processes slowing the final act of foreclosure, multiple foreclosures are taking place in our county on a weekly basis.  There are some really unusual effects as a result of this.   Normally, foreclosures are picked up fairly rapidly, often by realtors, builders or other investors, and occasionally the savvy young family of someone else who has bought a foreclosure in the past.  In a climate where it's raining repossessions, the market has saturated.  Many realtors aren't making anything, and so as sweet as a deal might be, they don't presently have any more cash or any more credit.  Our builder and our lawyer have stopped buying homes to be refurbished as rentals. In the dead construction market, they are simply hanging on by renting out the homes they had prior to this. They can't acquire any more of them.  Investors reach a point where they have all they need.  We also have the local effect of some really significant and devastating earthquake damage from almost a year ago.  That 5.7 (or 5.8 depending upon which official body you believe) destroyed schools, and many homes here, including some which were historic landmarks.  Sometimes, very good buys exist especially for those who are handy, but the banks still cannot unload them.   Meanwhile, many homes sit empty rapidly deteriorating without families living inside to do the constant maintenance and pay heating and cooling bills.  The cumulative effect of continued aftershocks also do damage, and the last one of 2.4 magnitude occurred in the early  hours of  yesterday morning.
           Bank of America has been proactive with their glut of foreclosures.  They have created an entire website where they pre-qualify you to buy one of their foreclosures, so they are controlling the acquisition, and then you can click on the state and region in which you are interested, and speak directly to someone who has been empowered to sell, or shall I say unload, your little money-pit directly to you.   My eldest son was embroiled in such an attempted acquisition recently, but BOA acted as they always do, in the manner in which it suits them best, never for the customer.  No matter, our son would rather deal with another entity anyway.
           This week though, I got to see foreclosure from an angle in which I had not seen it before.  I will give sketchy detail in order to protect the privacy of the family concerned.    A very wealthy family with children bought a home within the last six years or so, in which they owed hundreds of thousands of dollars. They had expensive cars, and money coming in.   At some point something changed, and they were no longer able to continue the payments which to my way of thinking, must be thousands of dollars monthly.   Rather than finding a smaller home, and shifting the gears it will take to find a new place to live, this family is fighting differently.   They claim their foreclosure, which has been a fairly long time in coming, is fraudulent.  They say that the paperwork which forecloses has only been initialled and not signed, and that the Trustees empowered to foreclose are not the Trustees who appear on their original note. (My understanding is that Substitute Trustees can be appointed at anytime)    They had a gathering at their own expense this week in a very public area in our county, in which they told everyone who would listen that they are being foreclosed upon illegally and unfairly. They seem to think that if they make enough noise, the bank will feel guilty and simply let them remain in "their house".  I listened but I did not say very much.   The reality is, an intelligent family borrowed a huge sum of money for an extravagant house.  They are presently unable to pay their loan and have been, for an extended period of time. This is simply the way the game is played.   The investors who gave the money to the bank, some of whom are regular people, like my Dad, friends of mine, etc. are not receiving their payment as contractually agreed, and their only remedy is to seize the custody and control of that property in order to continue to prevent its continued deterioration, and perhaps salvage SOME of their unwise investment by selling it themselves.   In short, if you can't pay, then you can't continue to that house.    The situation worries me because rather than problem solving and finding a less expensive housing alternative, and moving forward, this family is stuck in the fight and spending their money on clowns !

Yes, they used their money to hire everything they could use to tell their neighbors that they were being foreclosed upon.

  It also worries me from the standpoint of irrational thinking. Is this how violent attacks on family members and children which end in murder suicides begin ?
          The landscape of our rural Shangri-la has forever changed.  With so many homes in foreclosure and so many property values having fallen, our county has a fraction of the available funds with which to spend on the sheriff and a few deputies. (and I have already told you we only have volunteer fire)   Our county is much quieter, much emptier, and like its neighboring counties, a much less desirable in which to live.