More Bank Failures

A report was released today stating that bank failures are up to 84 this year. This signifies a growing opportunity to buy defaulted paper, short sales, and REOs. As an avid real estate and short sale investor, we’ve never seen opportunity like this.

Please understand this observation is not meant to diminish the severity of the economic crisis our country is faced with right now. The way I see it, investors are the ones infusing the economy with much needed cash. We’re the ones buying short sales and REOs, keeping houses occupied with families and preventing neighborhoods from deteriorating.

Yet banks don’t want to recognize this. Many of them feel investors are responsible for the mess we’re in. Ahh, but banks and institutional lenders should not point the finger. It started with the banks. If the banks didn’t loosen their lending guidelines in the first place, and permit less than credit worthy buyers from obtaining a loan, we wouldn’t be in this mess.

And yet the banks are setting up all kinds of roadblocks and guidelines to prevent the real estate investor from making a profit, as if making a profit were evil and a scourge that should be eliminated altogether. Just look at the seasoning requirements banks are instituting. More and more lenders are requiring 90-180 days seasoning on title before a house can sold to an end buyer. Pure goofiness. It should be going in the other direction. No seasoning requirements. Try this for a month and see how quickly money finds its way into the market. Credit will relax, and the economy starts flowing again.

Make it easier to do short sales, not tougher. Get inventory moving faster, get defaults off the bank books, take the money and move it forward.