Partners Trust

When someone is invested in a product or service, they want to make sure they do not sabotage their interest. Such is the case with banks that lend money to homeowners. The last thing banks want to do is flood a local market with repossessed properties that will deliver discounted prices, thus undercutting the valuations of the properties in which they already have a vesting claim.

Since light has been shed on the toxic explosion of bad loans that candidly, everyone had a hand in, the Federal Government has been dealt the dubious task of untangling this massive load of properties while trying to attend to the fact that homeowners are being forced to vacate these residences.

TARP and HAMP are programs representing efforts by the Federal Government to restore order and stabilize our real estate markets while reintegrating these “red headed step children” properties back into society. The process has dragged out because there are so many moving parts.  Many banks have been reticent to look in their rear view mirrors, to realize they need to own their accountability   this mess and start working out the “short sales” and recalibration of mortgages to the advantage of the homeowner still willing to pay to live in a home that is worth less than the mortgage itself. To some banks’ credit, they are engaging in this process creating “fast track” short sale processes and reducing interest rates so bravo to the Wells Fargo’s and Union Banks who are doing something to help.

I recently read an article in the Los Angeles Times Business Section about a plan to rent the homes currently owned by government controlled entities such as Fannie Mae. Right now there are about 250,000 homes under their ownership. What I like most about the idea is that it allows for families to be housed who may be otherwise separated because of space constraints.  We also create an income generation vehicle to pay down the debt that we all currently bear for otherwise dormant assets that when sitting vacant, do not generate income and actually start to deteriorate from lack of use. This ends up costing all of us more to maintain these assets. Talk about your opportunity cost!

The article state that our foreclosure filings are dropping.  According to Realy-Trac Inc in Irvine, there was a 4% drop in filings from June and a 35% decline from July of last year. These are positive signs of a housing market striving for balance and achieving it.  What encourages us more here at Partners Trust is the fact that smart people are looking for ways to make lemonade from lemons. That’s the America I know and I support all efforts to create positive realities from this devastating condition that has plagued our country and its citizens for far too long.

What are your thoughts about this idea? Should the Federal Government be in the property management business? Does it ultimately make sound business sense?  Please share your thoughts and leave your comments below.