Now I understand where the sub-prime crisis came from. Lenders live on a different planet. They do not seem to have a clue about what they are doing or trying to accomplish. There is a 28 x 56 doublewide here on 1 acre that the lender took back at the courthouse 1 year ago. I have been watching it ever since. The home is a 1999 model with an original price of $68k. The lender bid $58k at the courthouse, the lien amount.

I inspected the home & estimated 3 pages of repairs for $26k. My estimate was accurate because I had just finished another dw 2 miles away almost identical to this one. So I knew just what to look for. My realtor tracked down the owner/lender and we faxed them an offer of $20k, cash, as is, that they immediately rejected with no counteroffer. Apparently their negotiation policy consists of accept or reject, period. So of course there is no way to discern their goals or objectives.

Actually these people caused their own problem. Greentree was the original lender. These folks bought (assigned) the loan from them when it was already in default and then they took back the home at the courthouse several months later. I could not understand why they bought the loan when it was already in default. Do they have any experience with owners who are being foreclosed? None of this should be a surprise to them. What do they think happens to the house? Especially being vacant for 2 years.

My realtor tells me that they intend to fix it up and sell it for whatever they can get. Some basic research and math could save them a lot of pain and suffering. For one thing, they have already diddled around for 1 year letting the home deteriorate further. What do you think happens when some homeless folks take up residence in a home with no power? Think fist holes in walls, light fixtures pulled out of walls, etc.

Repairs: My repair estimates came from my contractors who know me and give me a (relatively) good discount. When these guys call long distance, they will get the special out of town prices. So instead of my $26k, they will probably spend $35-40k to fix it up, since they will probably use a large general contractor.

Sale: I am not sure how much they expect to sell it for, but this will burst their bubble: like the rest of the country, prices in my small town have dropped, especially recently. One home just came on the market for $65,900; it is a 28 x 80 dw on a permanent foundation in mint condition. That is absolutely astounding! That home would have sold for $85k 2 years ago. When these guys finish their expensive & extensive rehab, they will have a 10 year old rehabbed dw. How much do you think it will bring, assuming it sells at all? Add up their cost to purchase the loan (whatever it is) + the repairs + property taxes + holding costs and they are already bleeding money.

I had planned to fix it up & rent it for $550/month but I do not think these folks are the landlord type. I will wait 1 year while they fix it up & leave it on the market for many months and then maybe I will make another offer. I would hate to be one of their shareholders.

Dennis, This stuff happens all the time. If the banks were so business savy they would not have the number of REO’s they have. I to am seeing more and more dumpsters in front of REO homes. I think they are grasping at straws and trying to spruce homes up to minimize their loss. But having little to no experience in the rehab business and even less resources to oversee these projects, they will probably be net losses. I don’t waste my time and effort trying to convince them otherwise.


I agree with you about bankers’ business acumen. One of my relatives is an officer in a bank. A couple of years ago he made a hare-brained real estate investment (“You too can make big money in real estate.”) that is now under water.


While I do not have any direct confirmation I do suspect that some of the REO’s that would have been sold for less than owed may now sit as the banks play wait and see with the Gov’t bail outs.

Remember Paulson asked for $700 Billion to buy up bad assets but a week or so later began buying banks instead. There is a great deal of unknown it seems with what the Gov’t and Fed Reserve will be doing “to help” banks. This unknown would seem to me to have banks sitting on REO’s longer in the hopes that money may come their way from the Gov’t (our tax dollars) instead of through actual, sound business practices.

Just my 2 cents.