And yet another ingredient…
The risky low budget loans, that contain some really hard terms with it,
was also over abused by greedy investors to flip property without
using any of their own money (…as little as possible). Huge volumes
of risky investors fled the stock market dot.com crash and played
the game of real estate while it lasted. Many got caught up side down
as the market contracts from it’s artificially induced inflation. A lot of little
people will get carried away as the tide goes back out… and the
banks go after their booty.
The boom and bust cycle is a well oiled machine, to those who pull
the levers. Smart people do not play another mans game.
This problem with banks are not new when it comes to loaning money to individuals. This has happened in the late sixties and early seventies to farmers in the midwest, and a lot of them went under because of it. I can remember my Grandfather and my Father were telling our neighbors back then not to take the loans the banks were offering. Productive acre’s was worth about $ 700.00 an acre and the banks were lending money to the farmers at $1,200.00 an acre… my wife’s father was approached by the banks for the same type of deal in Missouri. (Wife and I met later in life), a lot of farmers lost a lot (remember farm aid promoted by Willie Nelson)… Now we are seeing it again, different arena, but basically the same.
I could be wrong, but it’s my understanding that banks submit a 1099 only on a “Short Sale,” not on a foreclosure. This is where the owner and bank settle on a sale amount, less than what is owed, rather than foreclose on the property.
A “debt relief” is recorded on the owners credit, which is less detrimental than a foreclosure.
My wife is currently negotiating with banks, on “short sales,” for several properties. This trend is more favorable to owners who are trying to avoid the foreclosure process.
Only in America…do we use the word ‘politics’ to describe the
process so well: ‘Poli’ in Latin meaning ‘many’ and ‘tics’
meaning ‘bloodsucking creatures’.
Speaking of short sales, a number I’ve inspected have been just that in the last couple weeks.
Last one was a million that went for 730k.
Always a market for us to inspect, just gotta be there to answer the phone!