Tuesday, October 28, 2008

Today's "I want to punch someone in the neck" story.

I've talked many times about how I think the fall of the real estate market started with the complete incompetence of banks on handling "short sales" of houses. You can read about my comments here from March 08, or here.

Today I was talking to grey area friend. (someone whom I'm not super tight with, but share a lot of personal stuff) Anyway - I knew he'd gone through a short sale on his house. He caught his wife cheating, and went through a divorce. That meant he used to have a two income household. I didn't really want to ask him too many questions. It sucks to loose your house. And your wife. Obviously, I don't want to make him feel vulnerable. Today he shared what happened.

He owed 320,000. on the house. When he put it on the market under a short sale, he listed it for 290,000.

That is 30,000. less than what he owed. He got an offer for 50,000. under what he owed. The bank denied him the sale. He got another offer for 250,000. The bank again denied him. He said this kept happening until all he could get for the house was 100,000. One third of his asking price.

Now, I hear people screaming all the time that dead beats are the ones who caused the housing meltdown. Some of that is true. But, what the banks did is really the more important part of the story. For the last year, they systematically all but guaranteed the housing collapse. Sure, some people got into trouble - but the banks made it impossible for these people to salvage anything of their lives. And it pisses me off so hard I have to contribute to helping the banks out. They did everything in their power to not be helpful, yet here they are with a hand outstretched. Pisses me off.

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