[quote=spdrun]Assuming the ratio of the two is even 1:1 (doubt it, probably more average and duds than cream-puffs), the average value is something like $158k. They’re buying AT MOST at a 30% discount, which is pretty normal for foreclosures. If there are only a few cream-puffs, this ratio goes waaay down.[/quote]
Agree to all. HOWEVER, “30% off” is not very doable, even at trustees sales, in more desirable areas of the US (such as coastal CA). In the more desirable areas, the vast majority of underwater trustors or recent years have bled every dime of equity (and then some) they could squeeze out of “their” property before accepting $3K or so from frannie to walk (after having lived in it an additional 24-40 mos for “free”). In addition, there are often jr. liens of income tax and child support and outstanding back property taxes appurtenant to the parcel on auction (avail for bid).
In most lower-cost areas of the country (incl most areas of FL), trustors weren’t allowed to borrow to the degree that they did in CA (and other higher-value mkts) as their collateral didn’t have as much “perceived value.”
It’s no wonder this deal looked attractive to a CA REIT, ESP if they are sharing future profit/loss with Fannie, mitigating some of the risk.
Obviously, many thousands of short sales sold for MORE than “30% off.” This form of “debt relief” to the undeserving is what has artificially caused the rest of the RE values in the surrounding areas of the closed SS’s to plummet. In these cases, the lenders just waited way too long fvcking around with deadbeat homedebtors and then threw in the towel (after 2.5+ yrs), taking it in the shorts.
The lenders who accepted deep SS prices in recent years (screwing us all) wouldn’t have had to sustain losses of this magnitude had they foreclosed timely in the first place.
