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Wednesday, February 18, 2009

The Best Bank Foreclosure Properties

By Charlie Reese

The controversy over bank foreclosure properties just keeps growing

As of the end of September reports, the number of bank foreclosure properties is up a whopping 71% over the previous year. The root cause of these astonishing figures lies with the banks and mortgage lenders. During the period of the well-touted 'ownership society', just a few years back, banks were making loans to many people who were clearly not qualified to assume a home loan which their income could not support.

It was recently revealed, largely through corporate whistle blowers, that mortgage brokers were encouraging applicants to not supply relevant information and even to inflate their income on paper, so that their loan would go through. Many such borrowers could barely make the payments at the lower initial rate. When the higher rates kicked in, the number of bank foreclosure properties began to rise rapidly, as almost none of these home owners were then able to meet mortgage payments.

It's disingenuous to believe that the banks did not see this coming. However, they did receive their money for a while, including interest and whatever late fees might be involved. As borrowers began to default, the banks, on the whole, failed to attempt renegotiate lower rates in order for the borrower to avoid foreclosure.

The result? People lost their homes, their investment and their credit standing. Millions of bank foreclosure properties flooded the market. Often, the values of homes, in entire neighborhoods across the country, plummeted. Therefore, people who owned homes and made their payments are now faced with property values that fall far below what they owe on their mortgages. Perhaps these are future bank foreclosure properties in the making.

This $700 billion bailout of the banks is a thinly veiled payoff, leaving the banks hale and hearty, while saddling the taxpayers with this debt for generations to come.

Following the initial approval of this bank bailout, AIG brazenly threw a $440,000 party to celebrate their largess, while they and other failed banks threw millions in 'golden parachute' packages at the CEOs, who logically and ethically were accountable for making the loans in the first place. At the same time, banks were still refusing to loan, even to other banks. Now they are reportedly moving $2 trillion amongst themselves and won't disclose to whom they are lending!

Other controversial issues arise in this scandal of bank foreclosure properties. Falling values make this buyers market. With the current credit crunch, few can qualify. This invites foreign investment, which doesn't bode well for our economy.

How about all of the people who already lost their homes, pre-bailout? Why did the government wait until bank foreclosure properties had reached such a crises point?

Moreover, this proposed home owner bailout addresses only home owners who are at least 3 months behind, owe more than the property is worth and who face imminent foreclosure. This represents only 20% of mortgage delinquencies. Will this make a real difference to resolving the crises in the end?

It remains to be seen what the final resolution to the problem of bank foreclosure properties will be. The situation begs the question, how much more quickly might the economy be stimulated if some of this $700 billion were paid to working people, instead of buying up the debt of failed and unscrupulous bankers?

instead of the rescue at the top, give some of this money to working people " this will stimulate economy if no one qualifies, consumers aren't buying, small business will go out of business, job losses

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