Bank of America Begging for Real Estate Investors to Bail Them Out
by blogger1
on Wednesday, 04 January 2012
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Rumours of a new Bank of America plan to liquidate REOs and speed up pending foreclosures on delinquent loans have been floating around for the last few weeks. Now, details reveal their idea for having real estate investors like you bail them out.
In what is being marketed as a sweet deal for real estate investors Bank of America is working on a program that would offer short sales on REOs providing investors took over these properties with the previous owners still in place as ‘tenants’.
Who doesn’t want a great turnkey investment property that is already producing rental income from day 1? Turnkey rentals shave become popular but BofA’s deal presents a virtual mine field for investors which threatens to blow up in the face of those who step in to bail them out.
Clearly the bank isn’t doing this to help either real estate investors or borrowers. This is further demonstrated by the fact that they are one of the few mortgage giants who haven’t joined in the holiday foreclosure moratorium. They are hurting, desperate and willing to be extremely creative in order to dump this glut of REOs on someone else, while trimming as much cost and risk as possible.
Obviously this plan has been cleverly hatched in order to avoid being sued for evictions, fighting over deeds, to minimize bad publicity and to lower the high costs of foreclosing on, holding and maintaining these REOs. All things it seems that would be dumped on those who would bail them out.
Note that the bank announced it would only roll out this program in poor markets where the can’t sell the homes themselves so why would you want to step in there anyway? Secondly, those who buy these REOs will be taking them on because the tenants weren’t paying. Why are they going to pay you? Plus if the mighty Bank of America couldn’t evict them what makes you think that you can?
The bottom line is that it is an ugly proposition for savvy real estate investors even though there may be some poor foreign investors sucked in by great marketing for it and who are not experienced enough to read between the lines.
Investors are probably much better off seeking out deals from wholesalers or hunting down pre-foreclosures themselves and either simply flipping houses using transactional funding
or finding fresh new tenants who won’t be trying to fight over the title to the home.
In what is being marketed as a sweet deal for real estate investors Bank of America is working on a program that would offer short sales on REOs providing investors took over these properties with the previous owners still in place as ‘tenants’.
Who doesn’t want a great turnkey investment property that is already producing rental income from day 1? Turnkey rentals shave become popular but BofA’s deal presents a virtual mine field for investors which threatens to blow up in the face of those who step in to bail them out.
Clearly the bank isn’t doing this to help either real estate investors or borrowers. This is further demonstrated by the fact that they are one of the few mortgage giants who haven’t joined in the holiday foreclosure moratorium. They are hurting, desperate and willing to be extremely creative in order to dump this glut of REOs on someone else, while trimming as much cost and risk as possible.
Obviously this plan has been cleverly hatched in order to avoid being sued for evictions, fighting over deeds, to minimize bad publicity and to lower the high costs of foreclosing on, holding and maintaining these REOs. All things it seems that would be dumped on those who would bail them out.
Note that the bank announced it would only roll out this program in poor markets where the can’t sell the homes themselves so why would you want to step in there anyway? Secondly, those who buy these REOs will be taking them on because the tenants weren’t paying. Why are they going to pay you? Plus if the mighty Bank of America couldn’t evict them what makes you think that you can?
The bottom line is that it is an ugly proposition for savvy real estate investors even though there may be some poor foreign investors sucked in by great marketing for it and who are not experienced enough to read between the lines.
Investors are probably much better off seeking out deals from wholesalers or hunting down pre-foreclosures themselves and either simply flipping houses using transactional funding
or finding fresh new tenants who won’t be trying to fight over the title to the home.
