Common Sense and Lenders - an Oxymoron?

Headlines bemoan that fact that we have been inundated with bank owned properties yet despite the problem it seems that the lenders have become so mired in the problem that they have closed their "Common Sense" departments.

How hard is it to spot a bank owned property? Drive down any street and look for the scorched yards and trash in the yard and chances are you have found one of these gems. Great deals? possibly, detriment to the neighborhoods, absolutely. Lenders will say they are trying to reduce their exposure and losses. Common sense would say the easiest to reduce losses would be to maximize the value of the distressed properties, not to insure that these properties have absolutely no street appeal. I watched these geniuses at work recently in the house next to mine.

We had renters living next to us in a home that originally sold in excess of $780,000. Young professional couple paying $3,000 in rent. Owner quit making house payments and the home went into forclosure. Step one of course was to evict the young family, wouldn't want to have that $3,000 coming in to off set the losses or maintain the property. Even after the property was vacated the water was on so we mowed and kept the property up as best we could, no one wants an ugly property next to them. In steps the lender to shut off the water and list the property with an agent some 40 miles away. The property now looks like every other foreclosure and the price has been dropped to $500,000. The broker has been to the property twice in over three months and the neighbors are outraged at the agent and the agents company. They would be angry at the lender, but the lenders name is never associated with the property. Lucky lender.

This seems to come down to common sense, particularly in upper end homes, for that matter any home. Allowing the properties to become run down diminishes the value of the foreclosed property and the neighborhood in general. The lender receives low ball offers, the agent appears like they don't care and neighbors pay the price. It really is time for the lenders to re-open their common sense departments - if they ever had one.

The effects of foreclosed propeties could be minimized by taking a few common sense actions:

• Leave the utilities on in the Summer- minimal cost maximum potential
• Use local brokers to market properties to get maximum impact in the market
• Enlist neighbors to keep the property up - most are happy to in order to protect their own values.- if not hire a local student to mow.
• Analyze the renters before throwing them out - they may not be covering the loan, but it sure beats zero.

No neighborhood is exempt from foreclosures, but Lenders, Realtors and Neighbors working together and using a little common sense could reduce the impact on neighborhoods.