Wednesday, August 17, 2011
National Association of Consumer Bankruptcy Attorneys Responds to Property Dump Proposal
The National Association of Consumer Bankruptcy Attorneys issued a response to a plan by the Obama administration to sell abandoned and vacant properties owned by Fannie Mae, Freddie Mac, and the Federal Housing Administration. According to the press release, the association recognizes there may be a need or value in reducing their inventory of properties, however, they should be concentrating on preventing the foreclosures to begin with. Then the article sites the failed HAMP plan, and then ask them to please consider another alternative or plan to foreclosure.
I believe this misses the mark. Our governmental agencies want to dispose of vacant and abandoned houses in their inventory. While I agree with the NACBA in that we should be concentrating on how to keep people in their homes, I think that could be better addressed in a different forum. Whereas, here, the government wants to dump properties into a real estate market that is moving at a snail's pace. I believe the dumping of properties into the market would further depress an already depressed market, further driving down the value of peoples homes.
There again, as stated, I do not disagree with the cleaning of governmental inventories, but perhaps it could be done in such a was as to not further depress the market. One suggestion would be to place the property on the market at 105% of market price, pursuant to an appraisal done within 120 days of placing it on the market. If the property does not sell within a specific number of days, lets say 180 days, then any structures on the property would be removed, and the property would be sold as vacant land for development.
Absurd, I think not. Why place the property for sale above market price? Well, the alternative is to either further depress the market, or create more competition in a market that is already saturated with inventory, or both. And by raising the structures on the property, the undesirable properties would have a chance for new life, to help stimulate the economy, and stop the continued decline of real estate values.
So, by this logic, a desirable property would sell with the possibility of stimulating property values, and if it doesn't sell, a plan is in place to allow breathing room for improvement, and stimulation of real estate values. While I will admit this plan is far from perfect, it is a huge improvement to simply dumping properties into a bad market.