Your Take 

Your Take: Should People Get Homes for Free?

ForeclosureIf you’ve been following the latest round in the foreclosure mess, you’ve probably read about how some banks have lost the loan documents for some mortgages. The gist, as I understand it, is that after mortgages were signed, some of the larger banks would enter the data into the MERS registry (which is owned by large banks). The registry helps facilitate the process because banks won’t have to go to the local records office to record the loans, which saves them time. After registering the loans, oftentimes banks shred the paper documents to avoid duplication. (all this I learned from reading Business Week, but I can’t find the nice chart they used)

Well it turns out that last year, March 2009 specifically, a bankruptcy judge in Las Vegas decided MERS could be a beneficiary under a trust deed. Since then, supreme courts in other states found MERS had no standing in foreclosure proceedings under local state laws. Whoops.

(Click to continue reading…)


Fannie Lets Foreclosed Renters Stay

Foreclosure Averted!Fannie Mae announced today that it would allow thousands of tenants remain in foreclosed homes as long as they stayed current on their rent. About 4,000 renters signed new leases and were permitted to stay in their rentals even though the property’s owners had been foreclosed on. While it turns Fannie Mae into a landlord, something it’s probably ill-equipped to handle efficiently, it’s probably the first action they’ve done in a long time that has made people smile.

The reason they’re doing it is because it makes financial sense (and they were forced to do this by the $700 billion Emergency Economic Stabilization Act). In a hot housing market, a foreclosed home can be sold fairly quickly. In the current housing market, foreclosures can sit for months, slowly (or quickly) eroding in value. By letting renters stay in those homes, instead of evicting them, Fannie Mae can leave those properties on auto-pilot and worry about the rest. Also, as someone who has considered buying rental properties, an occupied property is more valuable than a vacant one. It’s unorthodox but we live in challenging times.

I’m also glad renters aren’t getting screwed because their landlords were financially irresponsible. The renter shouldn’t be punished because the landlord made a mistake. I once knew a guy at one of my former employers who owned four homes during the housing boom. He would buy them with a low rate ARM, wait a few months, then use whatever equity he had built up to buy another. I used to hear me argue all the time on the phone with tenants about broken water heaters and I had no doubt he was a miserable landlord. Well, I heard now that all those properties are behind and now those tenants would probably be evicted.

One of the benefits of owning your home is control. When you own a home, you are in control. It may not seem like it sometimes but you truly do control your destiny, more so than if you are a renter. Unless you agreed to an ARM, your mortgage payment remains the same each year (it may go up because of taxes, but the principal and interest are the same). You won’t one day discover you have to move because your landlord was foreclosed.

That being said, I’m glad 4,000 families won’t have to be searching for a home in the winter. What do you all think of this?

(Photo: respres)

 The Home 

RealtyTrac Review: Service For Vultures

Cute BabyWhen it comes to making money, I’m all for capitalism. I like a free market and you can try to make money from as many means as possible. However, do you really need to be a vulture and swoop in on a foreclosure? There may or may not be a family living in that house but if you wanted to make money, do you want to use a service that preys on the misfortune of others?

There are plenty of places you can go to make a buck, you don’t have to tempt fate by making a couple bucks off someone you have to kick out of their home. (yeah, they made mistakes, but do you want to be the person who puts the nail in the coffin… just for an extra dollar?)

In all honesty, RealtyTrac doesn’t prey on the downtrodden… but they let other people pick at the bones of the dead. Is that worse? I think so, but that’s up to you.

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