Tuesday, July 15, 2008

Another problem that would be alleviated by a Land Value Tax.

"So I work for the enemy. :) A couple quick observations from what I'm seeing: 1. My company will avoid selling a foreclosed home we have taken at all costs. Many times we are choosing not even to foreclose because it is a waste of money. We just sit on it and twiddle our thumbs waiting for what I don't know. So we have a ton of bad debt but it doesn't "look" that way because we are avoiding that bad debt from hitting the books. If we do actually have a foreclosure we just play games with realtors, investors and homebuyers, we take their offers, and they wait 60 days, then counter offer, then maybe look at another offer...wait another 60 days, then counter offer. We are just blowing smoke so the big hit won't go on the books yet. It seems would would rather just be ok with not accepting payments anymore than having to take a home. 2. Another interesting observation. Do banks get any kind of federal money or assitance if they loaned $$ to people who are considered in "disaster areas"? The reason I ask is my company has had a bunch of loans where people aren't paying, and when I say not paying I mean not 1 cent in 15 months on 500k mortgages and we have done NOTHING. Just recently, some of these accounts have been placed under a "disaster relief" program due to the wild fires raging here in California. The catch is, when I am reviewing these accounts none of the addresses are even close to being in a fire areas. Yes, they may be in the same COUNTY where a fire is currently burning .....but 60 miles from actual flames. So now these loans maybe can be put back on the books as up to date because they are in a 'disater relief loans' and not "bad debt" anymore. Boy the banks never seem to halt with the tricks up their sleeves. I was wondering if anybody else has seen this. FYI the property locations are in Salinas, Seaside, Gonzales, Greenfield, Soledad, and King City. The fire is burning in Big Sur! Same county but no fire risk."

An LVT would make banks be far more honest about the real value of foreclosed properties. It would be too expensive for them to "hold and hope".