Posted by SCook85 on November 17, 1998 at 21:29:09:
Lending institutions see foreclosures as a profit center, though this is not always the case. When a lender forecloses on a property and tries to resell it they are obviously going to try to get as much out of it as possible. Many foreclosures get listed at FMV but rarely do they ever get that much for them unless the property is in very good condition. Banks will sell properties at a loss. There main concern is getting it off of there books. As long as they own the property it is considered a liability. The length of time on the market for a foreclosure means a lot. A bank in most circumstances will not accept a low ball offer in the first 30 days, but 4 or 5 months later they may accept offers that were less then what they received in the beginning. There is no rhyme to there reasoning. Just offer what works for you and do it every month if you have to.
When a loan is foreclosed and returned to the lending institution, suppose I present an offer 5K less than the loan amt., fees, etc. Is the loss of 5K assumed by the lending institution or are loses government insured?
If a lending institution gives a mortgage @ 14% or higher I would assume its due to bad credit or high debt ratios. I would guess that maybe 50% of these loans never make it to term and end up being foreclosed. Sometimes they only get a few payments before foreclosing. How are these companies making their $$$.
I always hear that these companies aren’t in the “real estate” business but then I’ve seen lenders list homes for FMV after foreclosure.
I’m not complaining, I’m just trying to get a better understanding of lending institutions,foreclosures etc.
make a win-win deal out of it somehow. take it at no loss if they will give you a line of credit to buy one that you like. creativity has no limits. my limited experience is that nobody knows anything, and there aint no form for that particular transaction. ask as high up the totem pole as you can get. make a friend…
Properties that have Goverment mortgage insurance (FHA, VA) or Private Mortgage insurance are going to pay the lender a certain percentage of the loan amount. I would guess that the majority of 14% home loans are investors and get paid off without default.
The lender is going to list at a value that an appraiser says that it can be sold for. The money above their insurance payoff helps with other loses.