The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Moominoid who wrote (87963)	9/3/2007 6:06:26 PM
From: Tradelite	Read Replies (1) of 306849

<< Why don't/can't banks rent out the property and keep it till the market is better?>> This would turn banks into property managers, which I don't think they want to get into. They'd have to pay someone (probably an outside management firm) to sign up tenants and collect rents, potentially accomplishing nothing but piling more costs on top of the uncollected debt. They'd rather get the foreclosure process over with and get on with the business of banking. Plus, I believe the mortgage document calls for disposing of the property to collect as much of the unpaid loan balance as possible, once the note is in default, so banks aren't given the right to hang onto it. I just glanced at a textbook describing all the various types of mortgages and how they can vary from state to state. If the mortgage document contains an "assignment of rents" clause, a bank has the right to collect rents being paid by any tenants the borrower might have while failing to pay the note. (I imagine this happens in commercial real estate.) That's the only reference I've seen to banks getting into the rental biz, directly or indirectly.

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