| First of all, why does the bank have the right to take | | | | that they will restrict the bank from making any new |
| your home? They do because the house was set up | | | | loans. That completely dries up their stream of income. |
| as the security (the thing of value) to "protect" the | | | | It is obvious that a bank will do almost anything to |
| bank from losing the money that they have lent you. | | | | avoid these two consequences of "taking back a |
| That being said- the bank really does not want your | | | | house". |
| home. What they want is the interest on the money | | | | Another internal motivator that discourages a bank |
| they loaned you. Owning property is counter | | | | from taking your home is the cost of the foreclosure |
| productive to the way banks make money. Owning | | | | process. It costs a bank an average of $50,000 in "in |
| property costs them money, it doesn't make them | | | | house" costs, attorney's fees and agent's commissions, |
| money. Think about it, the property doesn't pay them | | | | just to bring a house to the court house steps, for an |
| any money, people do. All the bank is trying to do by | | | | auction. Additionally the vast majority of homes at |
| "taking" a home back, is to cover their losses on a loan | | | | auction are not being purchased by investors. This is |
| in default. | | | | because the starting bid (or what is owed on the first |
| Owning property hurts the bank in other, more severe | | | | mortgage + fees) is not a good enough bargain. The |
| ways than just being an unwanted expense or a | | | | real estate market everywhere has slowed to the |
| non-performing asset to them. Banks must report the | | | | point that investors need a really low price to make a |
| amount of REO's or Real Estate Owned property, | | | | purchase worth while to them. |
| (these are homes that have gone through the | | | | As stated before, homes not purchased at auction |
| foreclosure process, and have been to auction, and no | | | | become the REO's that hurt the bank. With the vast |
| one has bought them, and now the bank is stuck with | | | | majority of these homes going back to the bank, this |
| them) to the Federal Reserve. | | | | puts the banks in a very uncomfortable position. This is |
| The 1st slap on the wrist that "The Fed" will impose is | | | | to the advantage of those willing to go to the work to |
| charging a bank with too many REO's, a higher interest | | | | negotiate with the bank. The bottom line to this whole |
| rate on the money they borrow to lend to customers. | | | | explanation is that knowing all this should give you |
| At this point, the offending bank cannot compete | | | | some hope and some leverage in dealing with the |
| effectively with other lenders who borrow their money | | | | bank. After all knowledge is power. |
| at the lower rate. The next step "The Fed" will take if | | | | Try to stop foreclosure! You can avoid foreclosure! |
| the balance of REO's remains out of compliance, is, | | | | There are options! |