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Although some lenders are offering temporary payment reprieves, many Gulf Coast homeowners will be unable or unwilling to continue paying for ruined homes on what may be environmentally tainted land. When payments cease, said J.R. DeShazo, an associate professor at UCLA's School of Public Policy and Social Research, banks will likely foreclose on the properties. Those banks will get stuck holding the land while they hope and wait for a federal bailout. Meanwhile, land speculators are waiting in the wings, expected to swoop into town ready to purchase blighted areas.
"Developers and builders will make a lot of money," DeShazo said.
I find it difficult to agree with this DeShazo. Here is why.
homegain.com
NO is not exactly Southern California. At these prices, what do you think land value is, $20,000? How about $30,000 max.
Hazardous material removal would easily wipe that out, so the land may have negative value. Who is going to pay the developers and builders to buy the land?
Could NO ends up being the mother of super fund clean up sites?
epa.gov
There is a percentage of homes that are going to be uninsured or under insured. A percentage of these homes are going to default on their mortgage. If a lender forecloses, the lender owns whatever is left including the potential liabilities. I seriously doubt if any lender is going to rush out and foreclose. This is especially true for junior lien holders who may have to throw good money after bad in order to keep the senior liens current.
There are other issues such as the CFC release this morning.
biz.yahoo.com
CFC is one of the largest loan originators and I assume they are still one of the largest originators for FHA loans. I wonder if the street realizes that FHA insurance also does not cover damage from flood and hurricane. What is going to happen to all the FHA loans, lenders, borrowers and servicers in the affected areas?
Bottomline, I believe foreclosure is going to be the last thing on most lenders minds. As a result, there are going to be a ton of properties in limbo that no one wants to own.
Ramsey |
