Posted by: HughWilliams in Foreclosures on
Mar 31, 2008
As many of you know, "I Buy Houses". I market this and by doing so I deal with a lot of sellers. Lately, I am finding one common characteristic that, in my opinion, is quite disturbing.
A typical scenario I find in this market is as follows: Owner purchased his home a few years ago for $350K. The market exploded, Owner reappraised his home and found out it had escalated in price to $600K. Owner went out and took out an easy money 2nd mortgage for $200K, therefore total debt = $550K.
Everything was fine....until Owner finds out that now his home is not worth $600K, but worth more like $450K - $500K.
The troubling characteristic that I am seeing is that many Owners are making the decision to NOT PAY BACK THE BANK! They seem to have this lackadaisical attitude toward their problem and I just don't quite get it...
It's not like they needed or used the additional $200K cash to buy the house - that money went right into their pockets...they were simply borrowing their "profit" (at the time). It is going to be an interesting correction...will keep you posted!
Hugh
