Just with the rental programs that Bank of America is working on, other banks are going to seemingly follow suit. Wells Fargo announced that it was giving a home to a family of a young girl who is fighting brain cancer. The home, located near the girls hospital in Michigan, is being given to the family mortgage-free.
It’s apparently a great time to be in the real estate market if you’re a celebrity in California. Last week we reported that Ellen DeGeneres and Portia De Rossi sold their Malibu home for $13 million. This week we discover that Robin Williams has listed his 654-acre Villa Sorriso vineyard for sale, and that Matt Damon has just closed on a $15 million dollar resort-like home in the Pacific Palisades.
Banks pulled one of the greatest magic tricks of all time. They made millions of Bank Owned REOs disappear. We all know that all great magicians make things re-appear afterwards. It seems that the banks are about to make the REOs re-appear now.
Did you hear that Ellen DeGeneres and Portia De Rossi moved out of Malibu? Their Malibu home, which they bought from Brad Pitt less than a year ago for $12 million, sold in June for $13 million.
Earlier this year, Bank of America started the new trend of banks trying to rent their foreclosed inventory rather than sell it. Now they’re going a step farther and looking to give away the homes!
Back in March we told you about Bank of America’s REO Rental Program. In this post, I told you that if Bank of America was successful, other large banks would follow suit. This prediction is now a reality.
What would happen if local governments started seizing homes by eminent domain due to borrower delinquency? What kind of precedent would this set? Is it good or bad for stabilizing the housing market; or should we leave the market alone and let natural forces take over?
The State of California is currently working on passing a Homeowner Bill of Rights. Monday 7/2/2012 the State Senate and Assembly took a big step towards getting this passed as a bill. “The Assembly, by a vote of 53 to 25, and Senate, 24 to 13, approved the Foreclosure Reduction Act”. This Act aims to help homeowners who are still struggling with homeownership. One of the most impactful things the act does is to limit the bank/lender options of foreclosure while they are exploring options such as principal reductions or loan modifications.
The big banks have stopped foreclosing, thus pulling millions of REO homes off the market. Many of these delinquent homes are turning to short sales or REO Rental programs. In the first scenario, banks work a deal with the borrower to sell the home, short of the outstanding loan balance. In the second, banks take homes back and then rent them to the former borrower or another tenant.
One of the things most folks neglected to consider was how the REO rental programs could and would be financed. This presents one of the largest hurdles.
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