The banks end up upside down on the houses just the same as an individual owner would be. The houses will continue depreciating.Rent doesn’t cover the debt for the banks any better than it would if one of us went out and bought up a bunch of houses right now. The best way to deal with the red ink is to get rid of them.
I didn’t see your post Perry, mine is obviously just a different version of the same thing.
The reason that banks don’t want to rent out REOs:
The rental income is much lower than the interests that banks can earn on the money being tied to the house.
Think about it, if you were to go out & buy a house today & rent it out. The rental income would not be enough to cover the mortgage & taxes. You would have a large negative cashflow every month.
Why would banks want to put themselves in that position ?
The reason that banks don’t want to rent out REOs:
The rental income is much lower than the interests that banks can earn on the money being tied to the house.
Think about it, if you were to go out & buy a house today & rent it out. The rental income would not be enough to cover the mortgage & taxes. You would have a large negative cashflow every month.
Why would banks want to put themselves in that position ?
Your comment made sense perfectly. I did not know such regulation existed. Actually, it makes sense that those foreclosed houses should not be a really fixed asset for the bank, but should return to the hands of people so that it can fulfill the objective of its existence.
Your comment made sense perfectly. I did not know such regulation existed. Actually, it makes sense that those foreclosed houses should not be a really fixed asset for the bank, but should return to the hands of people so that it can fulfill the objective of its existence.
