Buyers Increasingly Suspicious of Foreclosures

Fewer buyers are willing to consider purchasing foreclosed property than they were seven months ago, according to a study commissioned by Trulia.com and RealtyTrac.

Seven months ago, 54 percent of adults surveyed said they would consider purchasing a foreclosed home. In November, only 47 percent of adults say they’d buy a foreclosure.

The chief turnoff is perceived risk, with 80 percent of those surveyed citing hidden repair costs, a tricky buying process, and the possibility that the neighborhood will lose more value and drag the property down with it.

To compensate for these risks, 75 percent say they expect at least a 25 percent discount and 30 percent say they would only buy if there is a 50 percent discount compared with a comparable home that isn’t in foreclosure.

Other findings:

* 56 percent of single/never married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 60 percent in April.
* 43 percent of married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50 percent in April.
* 42 percent of divorced/separated/widowed adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50 percent from April.

Source: Trulia.com (12/16/2008

Can't Sell? Rent Houses Out

The architect behind mortgage-backed securities Franklin Bank Chairman Lewis Ranieri told Holfstra University conference-goers that the federal government and private partners should remove 1 million homes from the housing market and turn them into lease-to-own rentals in order to turn the economy around.

He blamed the collapse of mortgage-backed securities on a breakdown of checks and balances and scoffed at the way the government is approaching the problem now.

“You can’t do restructuring loan by loan,” he says.

Ranieri, a former chairman at now-defunct Salomon Brothers, supports changes in bankruptcy laws to allow judges to reset loans.

Source: Investment News Daily, Andrew Coen (12/01/08)