Sunday, January 1, 2012

Foreclosures in 2012: Prediction of coming tidal wave,' Banky Panky' still in action

Should  homeowners meet with President and Bankers?
 After reading a hopeful news report of a better 2012 for the housing market, it seems that many want to sweep fraud aside and ignore the coming tidal wave of foreclosures. Predictions seem to be based on the banks traditional lack of action during Christmas holidays, coupled with unemployment figures and continued low interest rates. Are those solid indicators that the housing market has now hit bottom and that we can now celebrate?

Foreclosure blogs and those watching numbers have predictions  based on news that 10 million more homes are at risk of foreclosure and are entering into the dangerous world of "Banky Panky" . Truth be told, all homes were already based on "Banky Panky" - the  majority of loans initiated in the early part of this century were toxic and the future foreclosure risk was high even though banks told investors foreclosure risk was low. Head spinning yet?  In the  world government assumed the risk. In HUD's "report to congress" HUD wrote:
 "Fannie Mae and Freddie Mac were allowed to behave like government-backed hedge funds, managing large investment portfolios for the profit of their shareholders with the risk ultimately falling largely on taxpayers."
So essentially, a person with an Fannie Mae loan, paid payments and then paid (as taxpayers) to have themselves removed from the home if they missed 3 payments. That same taxpayer then contributed to bailing out the banks and received no compensation from any government settlements with the banks.

Trying to buy a home even with cash can be a challenge in this market, where people have special financial challenges after bankruptcy, foreclosure or short sale. Prices given by banks are varied in reality depending on the laziness of the appraiser, short sales are often filled with problems and with HUD(even after finalizing paperwork) can take a long time to obtain keys to a new purchase. 

"Banky Panky" in action, before, during and after a home purchase. Difficulties vary state to state and difficulties are not the same from county to county or state to state. Many in the past year lied, claiming they would live in home to get around investor restrictions for bidding on homes. How rampant that fraud is anyone's guess.

Below is a little history based on a response I gave to one news predictive report. Many major news reports are showing housing prices are still dropping and that there are more foreclosures to come. The report I responded to was a little more optimistic for stabilization of the market.

FIRST  - Fannie Mae and Freddie (basically a government backed hedge-fund) now own the majority of the nation's PROPERTY that was illegally seized with false and fraudulent paperwork. Normally that would send the responsible people (bank CEO's) to jail.  The Republicans (much to my dismay as I am one) and the Democrats have been equally guilty of sitting on their laurels and doing NOTHING for over 4 years to stop  the tidal wave of FRAUD - unless it was to go after banks resulting in large settlements that beefed up state coffers.

SECOND - the housing market is  manipulated to keep the homes trickling in.Not all homes that have been emptied of living, breathing families are on the market.  Often people cannot even buy homes that are actually sitting empty and vacant, the bank doesn't own them and they have not gone through HUD's requirements to be listed for sale. Short Sales are still not where the should be be. Prices in many housing markets across America are still dropping.

THIRD - This country is in for a huge wave of new foreclosures that include (gasp) illegal paperwork once again.  There are tiny bits of media news trickling out that things are getting better - the real news is that prices are still dropping and people are still losing homes and the forecast is BLEAK.   

People are waking up and legally fighting banks for false foreclosure, foreclosing without standing, toxic loans, and other shady practices, there will be possibly be another round of bailouts to an industry that has already received trillions in bailouts plus insurance to cover any losses. Judges are starting to follow the law in ruling against banks. The states of California and Nevada are going after criminals and the "Banky Panky" actions of fraud.

With government in control of Fannie and Freddie, I equate this to the government foreclosing on its own citizens.  Of course, it's hard to tell who actually owns any paperwork or notes, since the whole murky mess is filled with dead trust funds and unrecorded transfers of paperwork. We would like to know how much of the sales of homes is investor based, as opposed to family based purchases.

UP CLOSE and PERSONAL update:   Our former home sold at auction for a little over 1/4 it's value (highest appraised price in it's heyday) .   NOW,  almost 1 year later it is up for auction, evidently the water has 10x the arsenic level allowed and banks will not finance it. The bank had no problem financing it before, but now it is up on auction with starting bid of 25,000, with a clouded title  and contaminated well water.

We'd buy it back for that amount easily in cash and remove the cloud, but no one is talking.  Great joy in the morning, isn't life full circle? I need a serious infusion of cash to take advantage of possible investments like this.  Anyone want to contribute?


عقار بورصه said...

This is terrible throwing people out of their homes.

عقار بورصه

Dave Velasco said...

Hmm. Well, as foreclosure becomes a major trend in 2012, we should guess that people will definitely shift into just renting houses than buying properties - which in return - will have an effect and increase probably on rental properties and investments in the housing market.

With even real estate school debating over buying and renting, guess that 2012 would a something to point to as such debate continues.