Thursday, March 4, 2010

Home Bargains Fraught with Bank Caginess!

Although banks are estimated to have some 7 million (foreclosed) homes in their inventory they are releasing only a few at a time running the cost to purchase these homes upward. To add insult to an already deep injury, investors are coming in with all cash offers which make buying a home for someone who wants to live there next to impossible.

Yet foreclosures are primed to rise as more than 5 million homeowners are currently facing foreclosure and the government programs aimed at keeping borrowers in their homes has failed miserable. Why? Because loan servicers make money while a property owner is in default, and the small amount the government offers these servicers doesn’t sway their interest.

Loan servicers have NO incentive to modify a loan for a borrower, accordingly only approximately 66,000 of the 750,000 homeowners who are allegedly otherwise qualified for a modified loan have actually received one.

The majority of borrowers seeking a loan modification are played with through a trial modified loan for periods of three months at a time, after completing this trial period, the loan modification may be denied and another trial period initiated. Meanwhile the servicer receives the benefit of these payments!

Borrowers acting in good faith often become frustrated and ultimately just give up, which appears to be just what the banks want!

Why do we say this?

The $787bn bank bailout was “allegedly” to stimulate the banks to make loans, now that the banks are rich with cash, Bernanke has instructed the banks NOT to make loans because as he said, ”loaning money into circulation will create inflation” instead Bernanke has devised a plan where the Banks will place blocks of cash totaling billions, with the FED keeping the funds out of the market place yet the FED will pay the banks interest on this money!

Let’s be real!

The reason for the all cash borrower being favored by the banks is that now this money is also taken out of circulation, and guess what- When the Banks place billions of dollars with the Fed and they draw interest, who do you think will pay that interest?

Yup, we’ve been had again!