Banks are foreclosing and warming up to the 203k loan idea…..sort of

It looks like banks are shying away from the loan modification option and getting more aggressive and foreclosing on delinquent borrowers homes.  The foreclosures figures may or may not reach a record in California but it’s a sign that more bank owned properties are going to hit the market real soon.  Here comes the 203k loan.

With that said, with bank REO department assets starting to swell, you can bet that they won’t want to hang on to these properties very long.  One bank REO employee I have spoke with said a “once and done” approach is what is needed.  It works something like this:  After the bank takes back the property and has it vacant, they want to send an inspector out to view the property to see how banged up the property may or may not be and assign a dollar amount to cure all repairs.

This doesn’t mean that the bank is going to fix them, it just means that they now know what kind of shape their asset is in and someone qualified, such as a contractor, home inspector, or even a HUD Consultant has written out an estimate on the repairs.  This will aid the bank to price the home right to sell and stave off severe lowballers.  Again this has a 203k loan ring to it.

What would be a perfect world is for the bank and it’s REO departments to realize that these repairs can be fixed with a 203k loan, either the standard 203k, or the 203k Streamline.  Why keep the property on the market for months or wait for the cash investor?  How about marketing the property with a vision to have funds to repair the home and even get new appliances while you’re at it?   It’s hard enough for homebuyers to come up with the downpayment for a home let alone have funds to fix it up and forget about HELOCs with that market in trouble right now.  About the only way to obtain funds to fix a home these days is a 203k loan and the sooner banks and borrowers realize this the better for all involved.

If you have any questions in regards to this letter please let me know by clicking here.

Warmest KW

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