What do you think of giving Property owners the 'Right of First Refusal'?
Lending institutions sell their loans all the time. You may get a loan from one company and shortly find out it was sold to someone else to service it. Usually this would have little impact on either the seller (they made thier money on the loan origination fees or closing costs) and the loan value sold is approx. the value of the loan. But when a bank fails, those assets are sold for a fraction of the value (as low as 10 cents on the dollar). Should you as a property owner have the ‘Right of First Refusal’ to purchase your loan at the discounted price. For instance if you have a $300,000 loan being sold for 10 cents on the dollar, should you be able to purchase your loan for $30,000?
We have had a lot of bank failures over the past 3 years and the surviving banks have been making a killing on buying up those assets. When Country Wide was bought by BoA they paid about 10cents on the dollar so actually purchased the $300K loan for $30K. Since they got that loan so cheap, even if they foreclose and sell it for $100K they make $70K on that transaction. A quick and easy profit for them and pushing property values even lower in the process. They have no incentive to either work with you on the loan or hold out for a decent price for the property.
This whole idea needs a lot of thought and there are many pitfalls if not done properly. But it may provide a way for property owners to have more control of their own destiny. Give me your thoughts or suggestions. Maybe we can hash out a way for this to work. Or may be just trash the whole idea. It’s a work in progress.
This question is in the General Section. Responses must be helpful and on-topic.