| It is the bank foreclosures that are responsible for the | | | | permission of the banks. Strangely banks are reluctant |
| housing crisis sweeping across the nation currently. | | | | to give their permission and are dragging their feet. |
| Bank foreclosures happen when the bank forecloses | | | | Bank foreclosed homes cause the banks to lose by |
| on a mortgage loan to get back unrealized dues. | | | | 40% whereas in short sale the loss for the bank is |
| When the borrower defaults the bank sends a | | | | 19%. |
| warning notice and after that starts the process of | | | | There are many explanations for bank foreclosures |
| foreclosure. The borrower loses the right on the | | | | being given precedence over short sales. There are |
| property. The unit is sold at an auction and the bank | | | | so many applications for short sales that the banks do |
| takes back its dues. If there are second or third liens | | | | not have the infrastructure to deal with them. There is |
| on the house they took get back their money. After | | | | lack of alignment between the various departments of |
| this if anything is left over the borrower gets the | | | | the banks. The result is by the time the borrower gets |
| money. | | | | a reply the buyer is no longer there waiting. |
| But during these tough days there are hardly any | | | | Another reason for bank foreclosure homes being |
| buyers. Bank foreclosure homes are taking place but | | | | preferred by banks to short sales is the problem of |
| since the units are not getting sold the banks | | | | securitization. The mortgage has been sliced and sold |
| repossesses and repairs the units and try to sell them | | | | to various investors - some being big and the others |
| directly. | | | | small. According to the rules of pecking order they get |
| Bank foreclosures are costly and harmful for both the | | | | their profits. In a short sale the big investor takes |
| banks and the borrowers. The banks have to spend a | | | | whatever can be got but the others are left high and |
| lot of money and energy as well as to go ahead with | | | | dry. This makes them initiate legal proceedings against |
| bank foreclosure listings. At the end of the run there is | | | | short sales if it is done without their wishes. |
| no guarantee that the house will be sold. For the | | | | Short sale is the only answer to the present crisis but |
| borrower a foreclosure leaves behind a bad stain on | | | | unless the problem of securitization is solved the |
| the credit records for quite a number of years. | | | | problem will not go away no matter how many |
| Bank foreclosures can be avoided if a short sale is | | | | measures the government takes. |
| agreed upon. A short sale can be done only with the | | | | |