Comments on: The Bailout Nation Is Alive And Well http://www.condometropolis.com/blog/2008/09/22/the-bailout-nation-is-alive-and-well/?utm_source=rss&utm_medium=rss&utm_campaign=the-bailout-nation-is-alive-and-well Orlando's Real Estate Pulse... Thu, 02 Feb 2012 16:18:16 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Craigghttp://www.condometropolis.com/blog/2008/09/22/the-bailout-nation-is-alive-and-well/comment-page-1/#comment-2442 Craigg Tue, 23 Sep 2008 03:52:06 +0000 http://www.condometropolis.com/blog/?p=384#comment-2442 Greg, thanks for the clear explanation of the current financial mess bail-out. I am still having difficulty understanding how the potential government bail-out will affect the housing market.Scenario: a unit in a condo conversion sold for $250K in 2006 (market value back then). The 2008 market value on the same unit is now $150K and comparable units in the complex are current listed at the $150K price...but with no offers/buyers anywhere in sight. The original purchaser defaults on his Alt-I, $0-down, $250K mortgage and the bank (mortgage holder) forecloses on the loan and evicts the purchaser from the unit. The bank attempts to sell the condo unit but cannot find anyone to make a reasonable offer to purchase the unit.What I don't understand: if the bank decides to get this foreclosed condo off their books, will the bank "sell" the condo to the RTC-like agency for the full $250K loan value or the $150K current market value or something like $75K (50% of the current market value)?Will the bail-out work like this?: the RTC-like agency acquires the condo unit from the bank for $75K, the bank would recognize a $175K loss on their books because of the bad loan. The RTC-like agency would then sell the condo unit at auction for say $85K to a new buyer who could qualify for a government-backed (FHA, Fannie Mae, Freddie Mac) mortgage...even if the condo conversion complex is chocked full of other foreclosures and mostly investor-owned units. The RTC-like agency makes a quick $10K profit on the deal and the new buyer purchases a condo unit with a $150K market value for $85K.Is this realistic? As long as the banks take all the losses and not the government (taxpayers), then I'm all for this bail-out. Greg, thanks for the clear explanation of the current financial mess bail-out. I am still having difficulty understanding how the potential government bail-out will affect the housing market.

Scenario: a unit in a condo conversion sold for $250K in 2006 (market value back then). The 2008 market value on the same unit is now $150K and comparable units in the complex are current listed at the $150K price…but with no offers/buyers anywhere in sight. The original purchaser defaults on his Alt-I, $0-down, $250K mortgage and the bank (mortgage holder) forecloses on the loan and evicts the purchaser from the unit. The bank attempts to sell the condo unit but cannot find anyone to make a reasonable offer to purchase the unit.

What I don’t understand: if the bank decides to get this foreclosed condo off their books, will the bank “sell” the condo to the RTC-like agency for the full $250K loan value or the $150K current market value or something like $75K (50% of the current market value)?

Will the bail-out work like this?: the RTC-like agency acquires the condo unit from the bank for $75K, the bank would recognize a $175K loss on their books because of the bad loan. The RTC-like agency would then sell the condo unit at auction for say $85K to a new buyer who could qualify for a government-backed (FHA, Fannie Mae, Freddie Mac) mortgage…even if the condo conversion complex is chocked full of other foreclosures and mostly investor-owned units. The RTC-like agency makes a quick $10K profit on the deal and the new buyer purchases a condo unit with a $150K market value for $85K.

Is this realistic? As long as the banks take all the losses and not the government (taxpayers), then I’m all for this bail-out.

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