The Spreading Infection Of Foreclosures

November 5th, 2007

Foreclosures seem to have come to stay. It is lurking everywhere to jump on the unwary. Even if one is not directly hit, in some form or the other secondary infection sets in. Help calls are overwhelming centers but very little is being done. Foreclosures have become all mighty and all powerful. The law seems helpless.

The foreclosure auctions taking place under the aegis of the Sheriff is choc-a-bloc with investors. But at the last minute they shy away because the properties hardly have any equity. This means that after paying off mortgage and other dues very little will be left over (something nothing or less is the answer) to make it worth buying.

This foreclosure fallout is a result of lending years when loans were available for a song. But all too suddenly the bubble has burst. People were sure that property prices always rose and never fell but everything has suddenly turned topsy-turvy.

Foreclosure auctions are changing colours and matching in with the times. When lenders have a surfeit of properties to deal with and there is nobody to bid at the Sheriff’s sale they are asking auction firms to sell hundreds of units at a go. Foreclosure sales have always been around but nothing of this jumbo size has ever been recorded.

Hudson & Marshall – an auction firm based in Texas had put up for bidding 200 Chicago foreclosure houses in one single sale. The company has held a similar sale in the previous year where only 25 houses were in the hustling. The representative of the firm compares it to an avalanche. They have just completed another auction where 200 houses in Southern California and 400 in Northern California suffered the fall of the hammer. These jumbo auctions offer title insurance and the opportunity to check the properties before the sale. Neither of these advantages can be availed of in a Sheriff’s sale.

But it is not easy going for the buyer because the lenders know business and count their pennies and dollars. The problem for them is that they are moneylenders and not landlords. Sitting with so many units is posing a problem. Winter adds to the problem of vacant houses sitting desolate and discarded. To add to their woes figures show that innumerable houses are ready to resent interest rates and in all probability will slip into the foreclosure basket.

Via

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