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Why Banks Sell Non-performing Mortgage Notes and Bulk REO on Aug1 2008

by User ImageHUD Homes Articles | Print the article |
These non-performing assets are creating tremendous detrimental effects to the lenders, and ultimately the entire economy. The non-performing mortgage could impact the bank’s ability to borrow by roughly 900%. If $100,000 is in default, the bank is prohibited from borrowing up to $900,000 until the asset is divested. In addition, as an asset loses value, the banks must write down the value and take a loss.

Lenders face limited solutions to alleviate the impact of the non-performing assets on their books. The venue of last resort for the lender is foreclosure. This is a costly process for the lender that begins with heavy legal expenses. It also results in extensive property management while the asset is an REO (Real Estate Owned). There is increased risk of damage with REO properties while they sit vacant; increasing the risk of devaluing the asset further. Finally, there are the marketing and transaction expenses that come with selling any property.

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Tags: Bank, Mortgage, Non-performing, Owned, REO
The Author User ImageHUD Homes Articles is Typically as soon as we hear the word "Hero" we imagine of someone astonishing with incomparable abilities - you know...somebody who is capable to jump the highest buildings in a single leap. You the Realtor apply your ethics, morals, and honesty to it, you are in life a hero, and you are in control, and how you play it, announces the end result of a hero. You save the economy by selling one house at the time. You the Realtor are what it really means to be a "Hero." Email this author | All posts by User ImageHUD Homes Articles | Topic: Foreclosure, Foreclosure Assistance | Tags: , , , ,

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