Counting the months to foreclosure
Letter to the Editor
By Inman News, Friday, June 11, 2010.Re: 'Bank repos hit new high in May' (June 10)
Dear Editor:
Years ago a Federal Deposit Insurance Corp.-insured lender had a very short time to dispose of foreclosed property, and also rules as to when it needed to start and complete the process.
I have a listing where the private mortgage insurance company screwed up the short sale and it is now 17 months delinquent and still not foreclosed. The process has started, but the attorneys keep extending the sale date. This home is not counted in (foreclosure) figures.
The change in FDIC rules is helping the lenders hide the true picture.
Don Stark
Owner-broker
Affordable Brokerage Co.
Colorado Springs, Colo.
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Submitted by Sean OToole on June 11, 2010 - 12:06pm.
Don - I believe you are absolutely right, and in fact I've heard the FDIC further changed the rules November 2009 specifically to allow banks to keep non-performing loans on the books at full market value. Seems to me that this was a necessity as many lenders would become insolvent if they were forced to mark their assets to market... something the FDIC simply can't afford.
To be fair, it should also be noted that there is another big difference between today and years past in that many mortgages are now securitized. As such the bank may not be the "lender" and thus perhaps not subject to FDIC rules as it is supposedly not depositors money at risk. Still, many of the large banks have large HELOC portfolios that they hold directly, that may alone be sufficient to question the banks solvency if assets were marked to market.
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
ForeclosureTruth.com