Wednesday, March 25, 2009

Banks Just Aren't That Into Property Management

I was going to write this really great post all about context and learned habits and some other stuff. Only I watched the news.

I didn't mean to you see. I was reading and The Biggest Loser was playing in the background of my reading and it went off, but I continued reading. The news came on. I was still reading until . . .

What I heard was disturbing at least to me. It also smacks of utter stupidity.

Dear Bank Foreclosure Lawyer,
cc: Mortgage Holding Bank Asset Manager/VP/SVP/President
CC: Mortgage Holding Bank Vice President
CC: Mortgage Holding Bank Senior Vice President
CC: Mortgage Holding Bank President

Does this scenario sound remotely common sense to you? Investor procures loan from your bank for multiple rental property. Investor locates tenant. Tenant pays rent with regularity and has proof. Investor gets in over his head, doesn't pay mortgage loans to your bank. Bank forecloses and kicks out rent paying tenant. WTF?!!!?

See how this doesn't actually get you any money? Don't you realize another investor is more likely to purchase a property if it's already generating income? Don't you realize you lose less money by contacting the current tenant and having her transfer her regular on-time monthly payments to your bank and into an escrow fund for this property. Because you do have an escrow fund for the property don't you?

I'm not certain why we are allowing our money to be used to bail you out when you can't handle small regular payments from a tenant for a property you are about to have in your ever expanding inventory of foreclosed homes. No, I'm no Bank President and I may not understand all the complicated laws created to keep you in business but that scenario doesn't sound like any company I would want to do business with.

I do understand you want an empty and prone to vandalism asset which has most likely been de-valued because of all the other empty assets surrounding it. You would rather have that then my money.

So while I don't pretend to know all the circumstances in Lisa Browns case, the fact that your bank and your lawyers believe a foreclosure should trump rental payments, is ridiculous. Even Fannie Mae suspended the practice of evicting tenants when the owner went into foreclosure in January of this year.

Maybe you don't want to be in the Property Management business, however, the property you are managing if only for a short while, is Your Property. You took it back from the lender. You own it and you aren't managing it very well.

If the eventual purchaser of the asset doesn't want the tenant in the property, deal with it then. Until that day comes put the funds into an escrow account. You are, after all a bank with a lot of lawyers, I'm certain you could put together an escrow account and not break any of the banking laws.


Gladly paying my rent to someone else.

Embedded video from CNN Video - Lisa Brown's money is too good for the Bank

We will return to our regularly scheduled self analysis and inner growth later this week.

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