Tuesday, October 26, 2010

Foreclosure Crisis and Short Sales

Short sales blues man has been on the sidelines these past many months, trying to renovate his new short sale house and expand the family that lives in it.

However, it's been painful not to chime in on the foreclosure mess (which seems to have been somewhat resolved now that the big banks have happily resumed foreclosing!).

Just a couple of days ago, the New York Times finally picked up on the related scandal involving short sales -- i.e., how the big banks are delaying or turning down short sales, which would avert foreclosure, because the fees they can make on foreclosure are too attractive.

OF COURSE!  Why avert a foreclosure, when you don't even own the loan?  Since most of the banks are acting as servicers, they have nothing to lose from foreclosure -- only something to gain from the fee involved.

Is it any wonder, then, that the big banks have invested almost no resources into their short sale departments?  They are manned by overworked cubicle slaves.   Faxes and documents are routinely lost.  Phone lines go unanswered.   Desperate borrowers, buyers and realtors on the other ends waste days and days trying to move their transactions through.

Obama's pathetic loan modification program did nothing to fix the problem.  

I suspect that much of the Tea Party rage is fueled by people whose lives have been tragically affected by the real estate collapse.  What's weird is that the anger would be channeled against big government, when big financial institutions are also the perpetrators, in collusion with big government.