Landlord Question and Answer Forum

Has anyone had any experiences with trying to buy REO listings, since the foreclosure freeze and latest bank crisis?

Despite your political belligerence in the Real Estate News forum, I'll be nice and answer your question. Yes, I have, I submitted a bid on an REO listing, only to have the listing temporarily removed because the bank is going back and double checking to make sure their REOs were foreclosed on legally. No word on the listing since they took it off, my agent basically said to consider it gone, and if I get a call in a few months about it, all the better, but I won't be holding my breath.

Posted by Renee R, MD on Wednesday, October 27, 2010

I just closed on a Fannie Mae owned home so the foreclosure was already done. I have submitted offers on two other bank owned which actually went pretty well if you consider 90 days acceptable. Ended up not closing on either but it had nothing to do with the bank. THat said, I think the extra hoops are going to delay any RE recovery by 12-18 months at least. There is today a large shadow inventory being artificially withheld from the market. As more and more people realize the futility in paying on a mortgage that well exceeds thier current value more and more will simply walk away from thier homes not because they can't make the payments but because it makes no economic sense to continue paying.

Posted by Stuart P, AZ on Wednesday, November 17, 2010

I haven't tried to buy any "Bank Owned" properties lately, but did make an effort to buy two different "Short Sales." The first one the bank decided that they would play hard ball and would NOT forgive the shortage the selling price would bring, compared to the mortgage amt. and said they would go after the owners for the difference. The owners then declared bankruptcy and pulled the property from the market. On the other, the owners were filling heartship petitions and doing everything possible to keep the bank from selling the property or allowing the bank to take posession. I decided shortsales arn't for me. From what I read, they say realestate prices will decline more, generally speaking.

Posted by Robert S, NJ on Thursday, March 24, 2011

I have been purchasing reo's and have not had any problems.Also in reply to the above post,banks can't go after home owners for the difference after a short sale,federal laws were changed in 2008.I am a tax preparer and have done taxes for many short sellers and know this to be true.The bail out money banks recieved was for that very purpose.Personally,I don't go after short sales they take way to long.Also,the sooner the government gets their nose out of the real estate market the sooner it will recover.Right now though,I'm content with buying properties below market value and creating cash flow.

Posted by Jeff A, CA on Sunday, March 27, 2011

Jeff I think you are right with respect to short sales but the bank does not have to agree to any short sale. In many states like CA & AZ mortgages are non-recourse so if the homeowner walks away or does a short sale the bank can not go after the owner for the deficiency. However, some states are full recourse like TX. If you walk away you still owe the shortfall amount remaining to the bank so the lenders there will simply choose not to do a short sale. They would prefer to make you pay or walk and you are still responsible for the difference between what you owe and what they can get for the home.

Posted by Stuart P, AZ on Sunday, March 27, 2011

I'm in california so that makes sense.I also understand that all states are different with state laws,however this is a federal law and federal law trumps state law and the feds did that for that very reason.I'm not 100% sure but I think federal law trumps state law in this case,it does in every other case so i don't see why it wouldn't in this case also.

Posted by Jeff A, CA on Sunday, March 27, 2011

Jeff I think you are correct as long as the bank agrees to a short sale. In that case the bank has no recourse if that is what the federal law provides for. The issue is when the bank does NOT agree to a short sale. They simply make you pay or foreclose without a short sale. Then state law applies and in states like TX the owner is still on the hook.

Posted by Stuart P, AZ on Sunday, March 27, 2011

We can agree to dis-agree.Congress passed the debt forgiveness act in 2008,recourse,non-recourse I don't think really matters,banks will only come after you if you have assets.Most people that forclose or short sale have none.Oh by the way,Texas is a non-recourse state like california.

Posted by Jeff A, CA on Sunday, March 27, 2011

Also if you have a fannie may or freddie mac or any other federal government backed loan and you forclose I don't see how any lender in any state can come after you for the mortgage owed,after the federal government passed the debt forgiveness act in 2008.I don't think the lenders can do it.I may be missing something,I don't know.....thanks for the conversation....

Posted by Jeff A, CA on Sunday, March 27, 2011

I don't have any property in TX but have two close friends with at least 20 properties there any they tell me they can not walk away because the banks have recourse. Since they have been investing in residential RE for over 25 years I trust thier judgment. That said, I will pass on your info and hope you are correct. However, how can it be that the banks "can't go after home owners for the difference after a short sale" as you state in one post above but in your last one say "banks will only come after you if you have assets". If the bank can not go after a homeowner after a short sale then what difference does it make if they have assets or not? I am not trying to be confrontational, just trying to understand.

Posted by Stuart P, AZ on Sunday, March 27, 2011

I don't think you are being confrontational....Google texas property codes chapter 51,then scroll down to deficiency judgements,you can read it better than i can explain it,it does get complicated.Are any of your friends property by,RoundRock,if so I would be interested.

Posted by Jeff A, CA on Sunday, March 27, 2011

I think Stuart picked up on the main point I was trying to make. The property was a shortsale, but after I put a CASH offer in, the bank decided not to shortsale it and hold the owners responcible for the full amt. of the mortgage. The bank does NOT have to give a discount, they can say, "we will not sell it for that price." If the bank "agreed" to the discounted price, then that would be all they would get. I don't know all the facts, but many people are now making "strategic" defaults. In other words, they DO have the money to continue paying the mortgage, but have chosen to simply stop paying, because the property is worth substantially less than the mortgage amt. I don't know if the owners can afford to pay the mortgage or not, but something made the bank decide not to shortsale the property and hold the owners responcible for the full amt. of the mortgage.

Posted by Robert S, NJ on Monday, March 28, 2011

Florida where the foreclosure laws prevent that and the homes just sit, ... Will the short sale procedure also freeze short sales, or is there any ... Your thoughts? ... A flood of REOs and a surge in supply is no in the interest of the industry.

Posted by shan m, AR on Friday, November 18, 2011