It just seems such a waste and shows some degree of irresponsibility and also vindictiveness on the part of the lender
2007-12-01 08:16:35 · 10 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Thanks all for your replies to my puzzling question. I was looking for main contributions to address the UK situation. However, I have decided that Traverse City Agent has the best and most informing answer.
2007-12-02 03:03:34 · update #1
It is a myth that banks will sell for less than fair market value. It would be stupid for a company to lend out 100,000 to then pay all the expenses associated with foreclosure to sell a property for 80,000. Banks require what is called a brokers price opinion to accurately guage what a home is likely to sell for in a 90 day period. The reason that many of these home look like such a deal is due to the condition of the home which often limits the kind of financing that is available. When you have a house that has to be purchased for cash becasue it's in bad condition that brings the number of buyers who can purchase it down. Fewer buyers mean lower prices.
On top of that you may have heard that real estate prices are falling in several areas of the country.
2007-12-01 08:29:17 · answer #1 · answered by Anonymous · 1⤊ 0⤋
1. If the bank sell the property cheap...and incur a shortfall in what they are owed and what they achived from the sale ... they get the shortfall from an insurance company who then chase the repossessed person for shortfall....
2.This is a free country and pple need to read the small print when getting a mortgage..pple need to take responsibility for their actions
3.If you know you are going to get repossessed sell and downsize...don't have to put your family through that experience...
4.Banks don't like repossessing its bad for business and their reputation...they do it when everything else has failed..
Why should their be laws its not illegal what the banks are doing...this is a capitalist country with a free market economy
People will always get repossessed regardless of what is happening in a country bcoz pple today are driven by consumerism, greed, want it all now, showing off etc
There is no vindictiveness on the part of the lender..banks let pple get away with stuff for a while b4 a house is repossessed..
I have been buying repossessed houses for the last 6 yrs from private selllers and banks..
some people tell me they had not paid the mortgage for over a year before the bank made the decision to repossess....
some pple add personal loans, car loans etc to their mortgages..which is irresponsible but its their choice...they don't seem to understand that its their family home and that the market can go down and not just up but also that interest rates can change...
We are a spolit and self indulgent generation thats the problem....
2007-12-03 03:54:51 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Why should there be penalties by law? Are you suggesting that the lender be required to sit on a property until they can obtain the price the home originally sold for? What if the condition has changed? The neighborhood? How would this ever be enforced and who would the enforcing agency be?
It is unrealistic to expect lenders to enter a agreement to loan money on property, the property serves as collateral for the loan, and then pay a penalty when the lendee defaults.
The lender isn't at fault here, the lendee entered the agreement and defaulted.
Irresponsible and vindictive? You should be pointing the finger of those accusations toward the buyers that entered these transactions.
2007-12-01 08:42:04 · answer #3 · answered by godged 7 · 0⤊ 0⤋
Why would they have to pay a penalty? They loaned an individual money to purchase an asset, with the asset as collateral. When the individual failed to meet their obligation the lender was forced to take possession of the property and recover what money they could.
If the payments were made on the loan they never would have to had to take possession of the property. They shouldn't be penalized for someone else not fulfilling their obligations.
2007-12-01 08:26:55 · answer #4 · answered by tom_gpp 5 · 1⤊ 0⤋
When a property is repossessed it belongs to the lender. The lender will try to get as much as possible for it, but, lets assume, they sell it "cheaply," as you said. What kind of a penalty would you impose? For what? If you bought a car for $100,000 yesterday and then sold it to me for $1 the next day, should you be penalized for this? And who will do it to you? The government?
2007-12-01 08:38:56 · answer #5 · answered by REALTOR 3 · 0⤊ 0⤋
It's not vindictiveness OR lack of responsibility. It's called BUSINESS. Lenders look to recoup money upon which they are paying interest as quickly as possible. If it takes selling the collateral for somewhat less, that's what they do.
2007-12-01 09:58:24 · answer #6 · answered by acermill 7 · 0⤊ 0⤋
The owner of any property, be it a corporation, organization, or private individual may dispose of it in any manner it sees fit. A bank or lender is interested in recouping as much of the loss of the loan principal as possible. It would be irresponsible of them to do otherwise.
2007-12-01 08:38:44 · answer #7 · answered by Anonymous · 1⤊ 0⤋
this is no fault of the Lender .. every person buying a house knows what will happen if they dont pay, its the same as any other long term financial commitment, you dont pay, items are re-possesed and sold to recoever debts incurred by default
irrisponsibility lies in the default of payment... not the lenders
2007-12-01 08:19:46 · answer #8 · answered by ξήĢŁĭŞĦ ŗǾşξ ©® ღஐღ 7 · 4⤊ 0⤋
They will sell it for the market value. Prices fluctuate in a market.
2007-12-01 08:20:43 · answer #9 · answered by stuttgart 3 · 3⤊ 0⤋
I don't see anything wrong with it. They are recovering their investment.
House prices are obscenely inflated, anyway.
2007-12-01 08:26:15 · answer #10 · answered by Andrew L 7 · 1⤊ 0⤋