It isn’t often I look at the comments below a story of mine on Kansas.com and say or think anything printable, but today’s an exception.
J.P. Weigand & Sons, the 800-pound gorilla of Wichita residential real estate, announced the formation of an REO today, a misplaced acronym that actually means “foreclosed properties division.” It should be a real “uh-oh” moment for anyone who follows the Wichita housing market.
Two key points emerge from the announcement: There’s already enough home foreclosure business to warrant the formation of a foreclosure division, Weigand officials said. And they’re preparing for more.
An alert and astute reader’s response: “This is sure a sign of the times.”
204 Comments
Well alot of folks think Obama will bail them out of their mortgage and give them free gas. So maybe they are not paying their mortgage payments hoping he will take care of everything late January.
Got any names and telephone numbers? That would make an interesting story.
Good question Bill.
Bill, I think you can dial 1-800-wingnut and get the scoop on that pov.
Or, the alternate number is 1-800-koolaide
Bill – did you get the info for your story?
“This time we can finally do something about health care we can’t afford or mortgages we can’t pay. This time can be different.”
Barack Obama, March 18, 2008
Doesn’t sound like repo’s are in order. Any other ideas?
“Any other ideas?”
Yes. Restructuring much along the lines the FDIC is doing right now with IndyMac. Costs the banks less than foreclusure.
So what you’re saying is due to loan restructuring those individuals that cannot afford the mortgages they signed up to will have their mortgages rewritten to terms that are easier to afford? And we as taxpayers foot the bill to the banks for loan deferral with the 750+ billion bailout?
Excluding the free gas, how does that differ from the original post in this thread?
And your solution?
The financial institutions and mortgagees take responsibility for what they signed up to. If the mortgages are “salvageable” then the banks could meet with the individuals and draft new notes. If not, unfortunately they go into foreclosure.
I would not do that prior to some serious restructuring of loan requirements, especially with Freddie and Fannie. I would not be opposed to having some lighter restrictions on a one time basis to allow many individuals to keep their homes, but it would require a one year moratorium.
The banks and the individuals need to do everything in their power to honor their agreements without taxpayer (gov’t) intervention. I believe this bailout mindet is very damaging to our nation and our standing in the global community.
On this we agree. My point with restructuring is much like what Shiela Bair seems to be saying. Consider:
I hold a $300,000 note on what is now a 250,000 house. If I restructure the note to $200,000 and the borrower can then pay that off I lose $100,000. I might be able to reduce that loss a bit by holding some sort of equity interest in the property upon sale but we’ll go with the $100K loss.
Now consider foreclosure: I get what will likely be a damaged house in a glutted market. I have legal fees, carrying costs, utilities, taxes, maintenence etc to pay. From what I have been reading it is not unreasonable to guess that I only salvage $150,000 at the end. That loss is worse than the restructuring loss.
Add to that a somewhat vague ‘big-picture’ loss: property values become driven down even more with a bunch of foreclosed properties in a neighborhood. I think that is part of FDIC’s Bair thinking.
I’m not looking at a ‘good’ solution but a ‘less bad’ one. And I don’t want those executives who created all these neat and nifty instruments benefiting one penny.
One last comment on this. While we are nationally in economic turmoil because of the total financial situation I really believe the foreclosure crisis is much more regional in nature, specifically Florida, Arizona, Nevada and California. I think those areas need to especially be held accountable.
With the location, climate and popularity in these locations the opportunity for “reward” is much higher, minimizing the risk.
Always enjoyable visiting with you bth.
Yes – the bigger the bubble the worse the pop.
These were the same areas that were the epicenter of the S&L fiasco in the 80s. Deja vu all over again.
Never did, bth. Big surprise, eh?
Jerry’s observation above is correct: There’s no such thing as a national housing market. Even the concept of a regional market is a stretch.
Housing markets – the buyers, sellers, brokers, lenders, et al. – are local in nature, with their own peculiar sets of characteristics.
Bery true Bill – as also reflected in the CapFed thread.
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