The whole housing mess

[alphatarget1]

I was over at chubby billfold and read a thread about how banks are kicking out renters on foreclosed properties. Isn't that kind of... retarded? If the banks would become a "landlord" the renters would be paying the "mortgage", which doesn't go to the principal of course. If they sit on it long enough and the housing prices recover, then they can sell it.

I'm sure some finance people would have more insights than I do.

 

[spidey07]

Banks aren't in the business of being landlords, not enough money in it for them. Too much overhead.

 

[Lonyo]

Banks don't want renters, they want capital back. Having an asset that isn't giving you back the lump sum you lent out isn't helpful.
They sell the house and get instant(-ish) cash, rather than having to wait however long to sell, and having a tenant in it who is only giving you back a tiny amount of the lump sum you lent.

 

[JulesMaximus]

Originally posted by: alphatarget1
I was over at chubby billfold and read a thread about how banks are kicking out renters on foreclosed properties. Isn't that kind of... retarded? If the banks would become a "landlord" the renters would be paying the "mortgage", which doesn't go to the principal of course. If they sit on it long enough and the housing prices recover, then they can sell it.

I'm sure some finance people would have more insights than I do.

Trouble is, they're paying the rent to the guy who owns the house...not the bank. The agreement is between the guy who defaulted on his loan and the renter, not the bank and the renter.

 

[alphatarget1]

Originally posted by: Lonyo
Banks don't want renters, they want capital back. Having an asset that isn't giving you back the lump sum you lent out isn't helpful.
They sell the house and get instant(-ish) cash, rather than having to wait however long to sell, and having a tenant in it who is only giving you back a tiny amount of the lump sum you lent.

Yeah, but they're taking a huge loss on selling the house right now anyway. More supplies = lower prices. Renters would effectively be paying the bank pure profit (which is what a mortgage is: bank lends someone money and gets paid back over time) since the rent doesn't go into the principal at all.

If the renter is shady that's another story.

 

[alphatarget1]

Originally posted by: JulesMaximus

Originally posted by: alphatarget1
I was over at chubby billfold and read a thread about how banks are kicking out renters on foreclosed properties. Isn't that kind of... retarded? If the banks would become a "landlord" the renters would be paying the "mortgage", which doesn't go to the principal of course. If they sit on it long enough and the housing prices recover, then they can sell it.

I'm sure some finance people would have more insights than I do.

Trouble is, they're paying the rent to the guy who owns the house...not the bank. The agreement is between the guy who defaulted on his loan and the renter, not the bank and the renter.

Once the bank notifies the renter they could be paying the bank instead...

 

[ElFenix]

Originally posted by: alphatarget1

Once the bank notifies the renter they could be paying the bank instead...

banks aren't in the business of being landlords.

 

[alphatarget1]

Originally posted by: ElFenix

Originally posted by: alphatarget1

Once the bank notifies the renter they could be paying the bank instead...

banks aren't in the business of being landlords.

I understand that, but if they lose 20-30% on every house they sell wouldn't it make more business sense to maybe hire some property management company to manage them and sell it only when the prices recover?

 

[Ns1]

Originally posted by: alphatarget1

Originally posted by: ElFenix

Originally posted by: alphatarget1

Once the bank notifies the renter they could be paying the bank instead...

banks aren't in the business of being landlords.

I understand that, but if they lose 20-30% on every house they sell wouldn't it make more business sense to maybe hire some property management company to manage them and sell it only when the prices recover?

no

 

[spidey07]

Originally posted by: alphatarget1

Originally posted by: ElFenix

Originally posted by: alphatarget1

Once the bank notifies the renter they could be paying the bank instead...

banks aren't in the business of being landlords.

I understand that, but if they lose 20-30% on every house they sell wouldn't it make more business sense to maybe hire some property management company to manage them and sell it only when the prices recover?

They're banks, they've run the numbers and the returns/ROI every which way there is. They determined they should not be in the landlord business. Either too much overhead, or too much risk for the return.

Notice the flaw in your thinking "sell when prices recover" - that is too much risk.

 

[JS80]

Originally posted by: alphatarget1

Originally posted by: ElFenix

Originally posted by: alphatarget1

Once the bank notifies the renter they could be paying the bank instead...

banks aren't in the business of being landlords.

I understand that, but if they lose 20-30% on every house they sell wouldn't it make more business sense to maybe hire some property management company to manage them and sell it only when the prices recover?

absolutely not.

It's like you buying crude oil futures and the price drops and you take delivery and sit on it instead of selling it at a loss!

 

[Toasthead]

Originally posted by: spidey07
Banks aren't in the business of being landlords, not enough money in it for them. Too much overhead.

 

[alkemyst]

Originally posted by: spidey07
Banks aren't in the business of being landlords, not enough money in it for them. Too much overhead.

Not to mention you have no lease with them...many would attempt to squat on the property and claim they sent their checks to the previous landlord.

 

[V00DOO]

Originally posted by: alphatarget1

Originally posted by: ElFenix

Originally posted by: alphatarget1

Once the bank notifies the renter they could be paying the bank instead...

banks aren't in the business of being landlords.

I understand that, but if they lose 20-30% on every house they sell wouldn't it make more business sense to maybe hire some property management company to manage them and sell it only when the prices recover?

Looking at the current foreclosure data the price recover won't happen for many years to come. So how long do suggest the banks to hold all these foreclosure homes? If you think home prices are going recovery soon, check this out Link

 

[alkemyst]

Originally posted by: alphatarget1

Originally posted by: Lonyo
Banks don't want renters, they want capital back. Having an asset that isn't giving you back the lump sum you lent out isn't helpful.
They sell the house and get instant(-ish) cash, rather than having to wait however long to sell, and having a tenant in it who is only giving you back a tiny amount of the lump sum you lent.

Yeah, but they're taking a huge loss on selling the house right now anyway. More supplies = lower prices. Renters would effectively be paying the bank pure profit (which is what a mortgage is: bank lends someone money and gets paid back over time) since the rent doesn't go into the principal at all.

If the renter is shady that's another story.

They would be responsible for maintenance, taxes, insurance, bills...they'd need to hire someone to manage this has well as handle the 'trouble tickets'

Not pure profit at all.

 

[geckojohn]

Wow, that's interesting.

 

[arkcom]

If the rent covered the mortgage don't you think the landlord would have been payin it?

1. Lend 80k on 100k house
2. collect 15k in mortgage payments
3. ????
4. sell house for 70k
5. profit!!!!!

 

[Eli]

If it's not profitable for banks to be landlords, how is it profitable for anybody to be a landlord? :roll:

I understand they don't want to do it, but lets be real here. There is certainly money to be made in the business.

 

[vi edit]

Originally posted by: Eli
If it's not profitable for banks to be landlords, how is it profitable for anybody to be a landlord? :roll:

I understand they don't want to do it, but lets be real here. There is certainly money to be made in the business.

It's not how they are structured. They lease money to people. Not real estate. They don't want the risk or overhead involved.

 

[whylaff]

All mortgages have different investors, and what they can and cannot do is often dictated by the specifics of that investor or group of investors. It is often more profitable, or at least helps reduce the amount of the loss, to take the loss and be done with it as quickly as possible, than it is to be a landlord and allow the property to be on the books.

Also, mortgages carrying PMI or MIP require a default or foreclosure process initiated for a claim to be started. Once a mortgage company starts a claim, they are required to take any and all steps necessary to acquire possession and title to the property to finish processing a claim.

Bottom line is, in order for a lender to preserve all options available to them, the property has to be free of all occupants.

 

[LegendKiller]

If you've ever been a landlord of a non-apartment style complex, you'd know how much it sucks. Banks don't give a crap about the marginal revenue. They'd rather not risk getting deadbeats who'll trash the place.