Comments on: Dear PoP – Foreclosures

By: AngryParakeet

AngryParakeet — Thu, 31 Jul 2008 22:18:25 +0000

I remember my loan officer trying to talk me into the worst loan, which he called an “arm” just like that, going on to say I could surely assume I would receive a salary increase each year…I quickly cut him off asking what is an arm – I was furious that he tried to slip that in because at the very first meeting I said I would not consider an AJUSTABLE RATE MORTGAGE! What a den of jackals.

By: DCer

DCer — Thu, 31 Jul 2008 18:11:33 +0000

I and most of my friends who “bought responsibly” in the 1990s have anecdotes about lenders and realtors lying to us about what we could afford. My wife’s secretary went to signing and her lender “accidentally” brought the wrong mortgage and she signed it anyway and then tried to get it switched to the right rate. sigh. I had one friend who bought and improved his house, but the looming arm was unaffordable and he had to sell quickly in 2005 and lost a small amount of money on the whole deal, better than rent.

By: InArlington

InArlington — Thu, 31 Jul 2008 17:29:30 +0000

What happens with a property is foreclosed?

Well, for one, the property sits there, occupied or vacant, as the lender or lien holder takes the necessary steps to gain possession. When this is accomplished, any occupants remaining in the property are evicted and the locks are changed. This is when we see the signs go up, with the vacant structure taking on a forlorn appearance as it not properly maintained. The lender or lien holder usually tries to dispose of the property as quickly as they can, often by auction or by a standard real estate transaction. But the selling of a foreclosed property, like many dealings in real estate, can be a slow, time consuming process. Eventually a buyer comes forward, the paperwork process begins anew, and after a while, we have a new owner.

Many of you reading this, I realize, will be thinking, “well, duh.” But the question was posed and, as such, deserved an answer. Foreclosure is nothing more than a financial entity taking back assets (the property) in lieu of a loan that has defaulted on. Over the course of history, the process has little changed: when one borrows money and then, for whatever reason, cannot repay, there are consequences to be faced. In modern real estate practices this usually involves the “taking back” of property.

What makes our ongoing foreclosure crisis particularly grating to some is that many home buyers—hundreds of thousands if not more—bit off way to much than they could chew, and now are crying foul. To be sure, some who signed on the dotted were bamboozled by lenders, but exactly how many and to what degree is nearly impossible to determine. Some blame must be placed on the hands of greedy lenders, of course, but, at the same time, there were a thousands and thousands of purchasers who were fully aware of what they were getting into (interest rate bumps, balloon payments, etc.), but took on the risks nevertheless.

It appears the crisis is now cresting its peak. By the middle of next year, the worst will likely be over and normalcy will begin to return in the real estate markets. Let’s keep in mind that even in the best of economic times, foreclosures happen and more often than many of use realize.

By: bogfrog

bogfrog — Thu, 31 Jul 2008 16:56:06 +0000

Hi Julie – I see the southern CH/Pleasant Plains foreclosures as a very good deal. If you’re in a 1-year lease, you are in a great position to start looking & possibly negotiate. You’re in no rush and you have a clean place to live if you need to work on the house before moving in. Most brick rowhouses are salvageable, and it’s an even better deal if you find one with a basement. The work is really not that hard to do (demo + repair). You might feel more optimistic if you could see a very similar house that’s already been fixed up and is being lived in. A lot of people are too cautious about what can be renovated/updated.

With a short sale, you would be ok if it’s a “bank-approved short sale”.

By: Herb

Herb — Thu, 31 Jul 2008 15:59:01 +0000

I have two friends who were living in a condo they were renting that went into foreclosure in February. 1 bedroom, newly renovated, stainless steel appliances, granite counters, etc. one block from CH metro.

They got it at auction for $219k. It recently appraised at $280K.

They really hit the real estate lottery!

By: nate

nate — Thu, 31 Jul 2008 15:43:04 +0000

DCer,
I have tried to do the same thing. I have bought fixer upper houses and apartment buildings. At least 1 or 2 every year. Being a landlord gives you a close to the ground feel of how swiftly DC is changing. The pricing power and the rents that landlords are commanding is very strong. I have seen a drastic improvement in the quality of the rental pool. More educated. More affluent. More diverse.

By: Roger

Roger — Thu, 31 Jul 2008 15:42:57 +0000

Most working folks are living just 2-3 paychecks away from being put out on the street. The housing boom is over due to easy credit given to under-qualified buyers which inflated prices for everyone. Folks who get foreclosed on their properties won’t be in the pool of qualified buyers for years. Housing prices will be stagnant for years. The good thing is that DC has attracted many wonderful new residents who are transitioning DC into a more vibrant city in which to live in. If you are in DC, you’re doing good vs living at the end of a culdesac in the exurbs.

By: DCer

DCer — Thu, 31 Jul 2008 15:04:12 +0000

DCDireWolf- In 1988 I talked for hours with my landlord about his practice of doing that. he owned 12 houses that he suspected were worth about 1.5 million and tried to buy one every year. By my back of the napkin calculations the houses today would be worth about $5 million, maybe $4.

By: DCDireWolf

DCDireWolf — Thu, 31 Jul 2008 14:34:29 +0000

Methinks some folks are gonna get mighty rich in the not so long run buying up a number of foreclosed upon houses at cheap prices.

By: Julie

Julie — Thu, 31 Jul 2008 13:38:35 +0000

I figured someone would have put an offer in that place. You can wait months and months for an answer on a short sale and then the bank rejects it. The whole process is pretty ridiculous.

I really didn’t investigate it much since we just moved here and are stuck in a 1 year lease. It is more a fantasy because I am so sick of renting but I am also too scared to fork over a ton of money on a place just to watch it go down in value.