Irvine Real Estate link, CA – Banks and foreclosures

by Robert Mack on August 13, 2008

in Irvine Real Estate

I don’t want to insult the intelligence of the reader, but there are folks who don’t know what foreclosures mean, and for the benefit of those few I would like to define this term in the layman’s language. When one borrows money from a financial institution to purchase a property and for some reason or other that individual is unable to pay it back, with interest, on agreed monthly intervals and amounts, the bank or the financial institution has no other alternatives but to take the property away from the owner. This action is called foreclosure. Irvine Foreclosures are not only dire for the owners but also for the lenders. Both parties lose. The only winner may be the third party who eventually buys the property at a bargain price.

Let’s face it; the banks are in it for a good chunk of profit. And also, without them [banks] most of us won’t be able to afford living in our own Irvine homes. A $500,000 loan balance at 6% over 30 years will cost you an additional $579,000 in interest only. That is, the bank will make an average of just over $1,600 a month on interest only over that period. In most cases they make good loans, but occasionally a bad one slips through their fingers, and they’ll have to deal with it, even at the cost of a few hundred thousand dollars. They don’t need the headaches and is not worth their efforts. They have plenty and a few hundred thousand will only make a small ripple in their financial bucket.

Ever since mid to late-2006 the rate of Irvine foreclosures has gradually increased to a new high. Lenders are overwhelmed with it. Not that they made bad loans but mostly due to hard economic times, unforeseen layoffs and unemployment are substantial contributing factors. The financial institutions cannot find enough time to process foreclosures in timely fashion. Most use their own escrow and title insurance companies. They make frequent errors (errors are inevitable and sometimes cannot be avoided) and if one is not careful one will pay for it—be it the lender or the borrower. In fact in couple of occasions I found gross errors to the disadvantage of my clients. They [escrows] are antsy and on the edge these days. The workload has taken its toll on them. We, The Mack Team, at Century21 Professionals in Irvine, make a diligent effort to go over our client’s final escrow closing statement, if asked, to ensure they are treated fairly and squarely.

Views, comments, responses and constructive criticisms are welcome.

Make it a great day.

The Mack Team

Robert & Tania Mack

Century21 Professionals

Irvine, Orange County

http://www.irvinerealestatelink.com

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