Thursday, April 7, 2011

Home Sales, HUD Homes and the FHA Mortgage Situation

All That Glitters is Not Gold
If you don't understand why construction of more new homes is progressing, while so many repossessed homes are sitting, unsold, at practically any price, read on, and maybe you will understand it better.  I didn't understand it either, that is, until the last few days of really concentrating my search on HUD homes for sale.  Most of these places that are being sold are going for less than half of the original asking price, if they sell at all.

Why, you ask? Because there are homes that sold with the loans  guaranteed by FHA, only to be lost  in the mortgage debacle.  Therefore, the Federal Government had to pay the mortgages to the lenders, when millions of people either just abandoned them, when they discovered that they owed more than what the homes are presently worth, and others lost their means of income, and had to walk away.  Also unfortunately, the public's tax dollars are what it used to fulfill that guarantee.  Now, with many homes, both stick houses and manufactured homes sitting empty, many just plain abandoned, many of them listed for sale, and not selling at any price, others are selling, but for only a fraction of what the original mortgage was, while the FHA is having to back up the guarantee that they agreed to, when people defaulted in their mortgages.  Many of these people ripped out all of the appliances, as well as carpeting, crown moulding, and practically everything else that they can remove that was in the home when they bought it.  They are leaving these places in such a mess, they just don't sell, or they have to be sold at a drastic reduction of the remaining mortgage contract.  It's a vicious circle, and so far, it seems to have no end in site.

A friend of mine has been renting a  place for the past fifteen years, and suddenly finds that her landlady defaulted on a loan she took out about five years ago.  The woman lead the lender to believe that she lived on the property in question, while she has not lived there at all.  Now, she has lost the property, and my friend will have to move, after constantly paying her rent on time for fifteen years.  The lender tells her that she can either buy the place or rent it for three to four time the rent she has been paying.  However, the place was never kept in repair, with the ceiling in the bathroom actually falling into the tub at one point.  The heater hasn't worked in more than seven years, and the water pipes are so old that the water doesn't even get into the water tank on the toilet to flush it.  To flush the toilet, she has to use buckets that she fills in the tub and pours into the toilet.  The house looks cute, from the street, but it is a real hovel, and should be bulldozed over.  There really is no way to save the place, but my friend would rather live in it, than to move, since she has privacy, and it has been a peaceful place to live for her and her pets.  The landlady only paid for materials, while all labor was free for her, for the entire time my friend has lived there.

For Sale But Not Selling
Even after being served with legal papers, my friend was repeatedly told that the place was not in foreclosure, as were her family members on repeated calls to the landlady.  My friend actually was subpoenaed, and appeared in court a few months ago, to testify against her landlady on behalf of the mortgage lender.  The landlady failed to show up at all in court.  Still, this woman continued to say she  was only a month behind, when she had not paid the mortgage payment since August 2010.  This woman (the landlady) also had told the financial institution, and FHA that she lived in the house where my friend has been renting from her for the past fifteen years. That loan is only about five years old. Fraud afoot?  It will be interesting to see what happens in this case.

Soon, one of my friend's family members went online, and did an in depth search, and discovered that the landlady had been lying since day one, and the place was indeed foreclosed on.  She did not even own it any longer.

Now, my friend is looking for a place, and may actually move in with me, as we can both do better together than separately in today's housing market.  She also recently had a fall, and can barely walk, and still must move.  If she waits for the natural progression of legal events, she will have possible ninety days before she will officially have to move.  That does buy her some time, and will allow her to save a little that will come in handy in getting another place.

We have known each other for about twenty-seven years, and get along well, and understand each other pretty well, with our children growing up together, and living just around the block from each other.  Since we are both retired and disabled, it appears that we would both benefit from living together, rather than on our own, we are looking for a place which we can own together, so that should something happen to either of us, the other one would inherit the place, and not have to move again, hopefully.

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