MOVED FROM ANOTHER THREAD-- TO HELP KEEP BOTH TOPICS FOCUSED. 
-Russ H.
A large RE Brokerage firm got a top advisor/lawyer to speak to the agents about it. The room was full of about 50 of the best performing agents in AZ. Most of them were millionaires. The advice was to foreclose on all your upside down houses that you own. If they are rentals then just collect the rent for the 6 – 8 months it takes for the bank to gain possession and just let the bank kick the tenant out. AZ statutes say this is legal as long as the landlord returns the security deposit. My contact said many had 10 homes that they collected 100k over the 6 months and then foreclosed on all of them. He said this meeting alone resulted in at least 20 or 30 foreclosures.
Why foreclose they ask?
Lenders will lax the underwriting in a couple of years. They will have too or no one will be able to qualify and REO’s will sit for years and years. By the time the market turns the investor can repair their FICO and buy those same homes for half price.
Last Thursday the AZ Republic reported more depreciation in 09 and 2010, only a 1% increase in 2011 and maybe a 2% increase in 2012. Of the tens of thousands who restructured their loan in 08, 58% of them are already in foreclosure or have foreclosed. Some banks are now resorting to drastically reducing the principle and creating equity for the delinquent borrowers in hopes to incentivize them to keep the home. Might as well Demo all Lender Owned properties, recycle the copper and auction off the land to the highest bidder.
Did I mention many of the borrowers pull out the A/C units, air handler, hot water heat, all appliances, counter tops, cabinets, toilets, sinks, garage openers, pool pump, and light fixtures and sell to neighbors? It’s a crazy looking yard sale. This further limits potential buyers because FHA loans won’t approve the properties without switch faceplates let alone a/c units.
-Russ H.
Snowball is a good word for it. I am not sure if this has been brought up yet but there is a big group of home owners and investors that CAN afford the home but choose to foreclose anyway. In fact they are encouraged to do so from advisors.
A large RE Brokerage firm got a top advisor/lawyer to speak to the agents about it. The room was full of about 50 of the best performing agents in AZ. Most of them were millionaires. The advice was to foreclose on all your upside down houses that you own. If they are rentals then just collect the rent for the 6 – 8 months it takes for the bank to gain possession and just let the bank kick the tenant out. AZ statutes say this is legal as long as the landlord returns the security deposit. My contact said many had 10 homes that they collected 100k over the 6 months and then foreclosed on all of them. He said this meeting alone resulted in at least 20 or 30 foreclosures.
Why foreclose they ask?
Lenders will lax the underwriting in a couple of years. They will have too or no one will be able to qualify and REO’s will sit for years and years. By the time the market turns the investor can repair their FICO and buy those same homes for half price.
Last Thursday the AZ Republic reported more depreciation in 09 and 2010, only a 1% increase in 2011 and maybe a 2% increase in 2012. Of the tens of thousands who restructured their loan in 08, 58% of them are already in foreclosure or have foreclosed. Some banks are now resorting to drastically reducing the principle and creating equity for the delinquent borrowers in hopes to incentivize them to keep the home. Might as well Demo all Lender Owned properties, recycle the copper and auction off the land to the highest bidder.
Did I mention many of the borrowers pull out the A/C units, air handler, hot water heat, all appliances, counter tops, cabinets, toilets, sinks, garage openers, pool pump, and light fixtures and sell to neighbors? It’s a crazy looking yard sale. This further limits potential buyers because FHA loans won’t approve the properties without switch faceplates let alone a/c units.
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