Yesterday was spent constructing yet another short sale file. A home purchased less than two years ago with 100 percent financing had been refinanced a few months ago with two loans totaling $120,000 more than the original purchase price. I'm sure hefty points were back- ended into the loan, but the buyer pulled enough cash to buy a new car, furniture, and who knows what else--and is in serious arrears (over $50,000) with both loans. Good credit has never been his strong suit.
The home is in a lovely neighborhood and will probably sell fairly quickly--at around $685,000, or what was initially paid for the property. Meanwhile, the seller is out of the country, scheduled to return sometime around the end of the month. I will present the offer(s) to the lenders and will await their reply.
In the meantime, I am wondering about appraisals and shaky credit and investors, somewhere, who are going to get burned. We want to point fingers, but need several to do the job justice. Two would point to brokers and lenders who were accepting easy money and passing the risk on to others. Another would point to ignorant or greedy borrowers who believed property values had nowhere to go but up. Some surely knew what was happening, and took lenders for all they could.
The bottom line is greed.
The amazing thing is that this partiicular lender (Countrywide) is STILL sending mailed notices to these defaulted homeowners advising that they could immediately qualify for over #100,000 in credit!
Where does the madness end?