Wednesday, January 11, 2012

Housing and Banks

So I have been wondering if banks own all the houses that were foreclosed upon why do they keep them? I assume that the house is not worth as much so the banks are creating an artificially high standard for loans thus keeping hold of the houses until the market price increases again and the houses can be sold for a higher profit.
The bank just has to wait out the current market. Of course houses fall into disrepair during this time which will put general contractors and handymen to work when the houses sell.
The cycle on this is odd too. Just a for instance.
fellow owns land. Holds onto it for a long time. sells it for a very good price to a developer. Developer sells lots to builders at a higher price, developer builds a house on spec and then sells it to folks at a higher price, or not and losses tons of money. People get the house on a mortgage from a bank. Folks find they can not make the payments on the mortgage so the house goes to the bank. The bank does not want to own the house. But they can not sell it for what it is worth or what is left owed on the house. If they sell it for less money then what is owed on it they will owe someone money somewhere.
It is like the Potter Field problem. Your money is not really in the bank. Your money is in the houses, your money is in the cars, your money is in some Super PAC.