Kare 11 does another story on Foreclosures and exposes Banks not trying to help people

[annm4peace]

The reporter is getting closer but needs to dig further.. needs to follow the money,, why are banks willing to take such huge losses by letting them to auction, rather than renegotiating a loan?

Here is the Text from the Kare 11 show tonight:
http://www.kare11.com/news/news_article.aspx?storyid=557891&catid=2

In January this year, six out of every 10 homes sold in the Twin Cities were either in foreclosure, or they were involved in a "short sale."

A "short sale" is when the person living in the house sells it for less than what is owed. Banks must approve this type of transaction.

In the case of either a foreclosures or ashort sales, banks lose money.

But we're finding the banks themselves may be largely responsible for this for how much they're losing.

We've found many cases where they're just not talking to homeowners in trouble, not working to avoid foreclosure.

If they did work with these homeowners, experts tell us they'd not only prevent a lot of heartache but they'd save themselves a lot of money in the process.

We've found mortgage lenders "not talking" to people like Jennifer Raiter, in angst over her "adjustable rate mortgage" which is sending her house payments soaring.

She can't refinance because her home has lost so much of its value and now she owes more than it's worth.

Kevin Paulson is another guy whose bank is not talking with him either.

He'd like to see a short sale because banks have houses all around him in foreclosure, dragging the price of his home down so far he literally can't get out.

He told us, "It's just too hard to compete with the banks selling houses here at half the price of mine."

We've tried to talk with banks about this directly, including the Federal Reserve, which regulates the banks.

But they're not talking.

What's curious here is that banks and other lending institutions are taking major hits in this economy.

And it would appear the longer they wait to help people, the larger the hit they take.

Mike Jacka is a real estate agent and investor who believes bank operators honestly don't understand what's going on in their own operations.

"That's the only explanation," he told us. "They really don't know what's going on."

Jacka says the problem boils down to a classic left-hand right-hand problem with major mortgage lenders.

They put debt collectors in charge of loan modifications and short sales.

They have a completely different department - loss mitigators - in charge of foreclosures.

"These are two different departments, in two different states," he said. "They probably don't even know how to get in touch with each other."

He says he sees it all the time and he pulled up a couple examples to illustrate his point.

There's a house on Van Buren, in St. Paul, where the bank was involved in a short sale.

Listed initially at $223,000, all indications are the lender had an offer of $179,000.

But, in the end, months later, it sold in foreclosure for just $100,000.

That's about $80,000 less than the first offer.

Jacka says, that's not just a dumb-move for the bank it fuels the drop in the housing market.

"Somebody would have been there today making payments," he said. "That would have maintained the values of the real estate in the market."

Another example on the market for a short-sale, a home with a price of $299,000.

All indications are, there was an offer at $209,000.

But the bank didn't get it sold and let it go into foreclosure.

Months later it sold for $180,000, that's $30,000 less than what they could have had.

But there's another case he credits with literally changing his approach to business.

"This was the eye opening one for me," he told us.

It's a single-family bungalow in Cottage Grove.

He was listing the house as a realtor, trying to keep the sellers out of foreclosure.

He worked with the bank on a short sale.

The banks said they wanted $225,000.

Jacka had an offer for $190,000.

The department at the bank managing the short-sales said, "No."

The home went into foreclosure.

But when the foreclosure department put the house on the market they started out asking $10,000 less than what Jacka had offered.

In the end, it sold for $40,000 less than what he offered - about $150,000.

Right then and there Jacka decided he didn't want to sell these properties anymore. He wanted to BUY them in foreclosure.

"It was like what are we doing this for?" he asked us. "Let's start doing this after the banks get them (and the properties go into foreclosure) because we can buy a lot cheaper."

Consider the situation he's looking at. Short sales involve people who are desperate. Foreclosures involve only the bank.

The wait for a response from the bank on an offer on a short sale averages about 130-days.

The wait on an offer for a foreclosure is just one-to seven days.

So, buying the foreclosed properties he says is less emotional, faster and as it turns out - often as much as half the price as buying the same property in a short-sale.

Jacka says the incentives for lenders appear to be all messed up.

You'd think they'd be all about avoiding the cost of foreclosure and making more money for the bank.

"You'd think that's what they want," he told us. "But I'm not really sure. I think sometimes they're just so overwhelmed the people doing these short sales at the bank, the loss mitigators, they just want to get to the end of the day.

*******
a reminder of the type of Govenor we have, this was from 2008
Minnesota Governor Pawlenty Vetoes Bill to Help Stop Foreclosures

http://www.progressivestates.org/node/21922
***************************************************
Check out People's Bailout and help if you can:
http://sites.google.com/site/mncrisis/