The REAL Victims of the Foreclosure Crisis: Renters

[Viridian]

I agree that the situation in the OP sucks, but why not just buy a house instead of renting?

Not everyone has the cash to pay upfront the deposit, and not least that not everyone has the credit history good enough to get a loan.

Also, some people actually like the freedom associated with not owning. If you own, you're kind of stuck in place. If you want to relocate, you have to sell your old house first, which might be easy in a hot real-estate market, but a real bitch in a bad one. And if you're renting and something breaks, you call the landlord rather than shelling out money from your own pocket for repairs.

Maybe there are some situations where it would be better, but if you can possibly afford it, go for building equity. Maintenance is a pain, but having something of value after 20 years would be nice too. I've also found that paying for your own repairs gets you tons better service. Finally, depending on a variety of factors, your house payment may end up being a lot less than your rent. (Which surprised the heck out of me.)

And not having to put up with idiotic landlords and noisy neighbors who share a wall is a bonus. (The explanation of why my neighbors were allowed to have a dog and we were not was hilarious. I had no idea a white person owning a dog was racially insensitive and whatnot.)

Unfortunately, as I said before, home ownership is not always an option available to everyone.

I'd like to think that the foreclosing bank might be reasonable with the leaseholder, but it'll probably take getting the media or some kind of advocacy group involved to have a good chance.

[Broomstick]

I agree that the situation in the OP sucks, but why not just buy a house instead of renting?

Well, my parents are not physically capable of maintaining a house anymore, that is, in fact, why they sold their last house and are now renting. Any maintenance and repairs are taken care of by someone else.

It's better to rent than to get a mortgage you can't afford - that is precisely why many subprime people are being foreclosed on, they entered into a contract they couldn't follow through on, in part because housing prices were so expensive they simple couldn't afford to buy a home.

It used to be customary to rent until one had a sufficient downpayment saved instead of entering into a usurious "no money down" agreement.

If you will be moving again in a short period of time renting might make more sense.

And sometimes there is a different issue. In my case, I had a choice between purchasing a home and learning to fly because I did not have the money to do both. I chose the latter, because I wanted to fly more than I wanted to own a building. That's a rare exception, but such things do occur.

That's just off the top of my head.

[Broomstick]

Not everyone has the cash to pay upfront the deposit, and not least that not everyone has the credit history good enough to get a loan.

Also, some people actually like the freedom associated with not owning. If you own, you're kind of stuck in place. If you want to relocate, you have to sell your old house first, which might be easy in a hot real-estate market, but a real bitch in a bad one. And if you're renting and something breaks, you call the landlord rather than shelling out money from your own pocket for repairs.

Maybe there are some situations where it would be better, but if you can possibly afford it, go for building equity. Maintenance is a pain, but having something of value after 20 years would be nice too.

Maintenance is even more of a pain when your partner is physically incapable of contributing to the hard work required at times. Sure you can hire someone else to do it (in fact, that's sort of what I'm doing for a living now - maintaining other people's homes) but it's expensive.

Finally, depending on a variety of factors, your house payment may end up being a lot less than your rent. (Which surprised the heck out of me.)

But more commonly, after all the associated costs are added up, your monthly housing costs for owning exceed those for renting.

And not having to put up with idiotic landlords and noisy neighbors who share a wall is a bonus.

Yeah, well, well my husband was still playing bagpipes for a living WE were the noisy neighbors.

Of course, with some homes you have busy-body "home owners associations" that can dictate what you can and can't landscape/plant on your land, what color(s) you can paint your house, what sort of windows/drapes/shades you can have, what you can and can't park in your driveway... not much of an improvement if you ask me.

Unfortunately, as I said before, home ownership is not always an option available to everyone.

Not everyone WANTS to own a house. People keep forgetting that. Some folks have other interests in life than wanting to cut the grass on the weekends and fixing leaky faucets and all the other details of home ownership.

Yes, home ownership has some positive aspects but we seem to have forgotten that it's not the best or the most desired option for everyone

[Broomstick]

One thing that might be worth a shot in a situation like the OP is getting in touch with the bank and asking if the renter can keep on renting the apartment. If a bank is foreclosing on a property, especially a residential property as is the case here, that means they are incurring costs all the time. Getting rent money from the tenant would offset those some, and there would be someone there who is presumably going to keep an eye on the place and keep it in shape. If the place is vacant, it might attract squatters, vandalism and other sort of undesirable elements.

So from a bank's point of view, keeping an account used to funnel rent money from properties and having a system for it is little expense, good business sense and incoming revenue.

It just seems that in the US many people are used to assuming that the only option is moving out without even trying to negotiate. It might be a valid assumption in many places, but I would not assume so universally. In their place, I'd try to contact the new owner while looking for a new place at the same time.

Many banks absolutely refuse to act as landlords due to liability issues. Much easier, and less risky for them, to turn off the lights, lock the door, and just send someone around periodically to cut the grass.

There's also more to being a landlord than simply collecting rent. Things go wrong any time of day or night, any day of the week, not just during business hours - so who is the renter to call when the bank is closed? Someone will have to be on call 24/7. Most banks just don't want to be bothered with all that.

[His Divine Shadow]

I'm in the process of trying to make a decision on this subject, renting or buying? My girlfriend wants us to buy buy buy, I'm not as sure however. It seems to me that buying an apartment would still entail having to pay aorund 200 euros monthly to the whole complex for various upkeep plus having to pay of a loan which from what I can see would be about double what we pay in rent. We pay 440 euros a month for a 60 square meter 2-room apartment(with balcony and storage areas and more) located really nicely in Vasa. Any loan worth taking would atleast be 80-90 thousand to get a bigger three room apartment atleast, no point in buying a small 2 room place really. We could really use another room as is.

On the other hand, buying might be good as gas prices increase then apartments in and around Vasa will go up in price when people from outlying regions will want to move here to be closer totheir jobs. Assuming other economic factors don't wipe out what good an increasing value on your apartment will bring. And it is still possible I suppose that the housing market will decrease yet for a year or two.

[Broomstick]

Question: is there some language quirk I'm picking up here? In the US, if you buy it, it's a "condo" (condominium), but if you rent, it's an apartment (unless you're renting a single-family house). Saying you're "buying an apartment" sounds very strange to me - is that a common usage elsewhere? If it is, I suppose I'll just have to get used to it.

[His Divine Shadow]

In my head apartment just means a place in a building complex and not a stand alone house. So apartments can be either rented or bought. We don't have a word for condo here and I totally forgot about that.

[Colonel Olrik]

Question: is there some language quirk I'm picking up here? In the US, if you buy it, it's a "condo" (condominium), but if you rent, it's an apartment (unless you're renting a single-family house). Saying you're "buying an apartment" sounds very strange to me - is that a common usage elsewhere? If it is, I suppose I'll just have to get used to it.

The confusion is the result of an often used but erroneous straight translation to English. The concept of "condo" as separate from "apartment" doesn't exist in our languages so even when talking in English we tend to use apartment to describe any residence in a building block (rented or owned), as opposed to a stand alone house.

[Aaron]

Question: is there some language quirk I'm picking up here? In the US, if you buy it, it's a "condo" (condominium), but if you rent, it's an apartment (unless you're renting a single-family house). Saying you're "buying an apartment" sounds very strange to me - is that a common usage elsewhere? If it is, I suppose I'll just have to get used to it.

See in Canada an apartment is one of those buildings that have eight or so flats in a large building (the classic sitcom deal) where a condo is a bunch of rowhouses.

You can buy or rent either one.

[Broomstick]

The confusion is the result of an often used but erroneous straight translation to English. The concept of "condo" as separate from "apartment" doesn't exist in our languages so even when talking in English we tend to use apartment to describe any residence in a building block (rented or owned), as opposed to a stand alone house.

Ah, I suspected it was something of the sort. Very well, I will adjust mental gears when discussing things here.

[Broomstick]

See in Canada an apartment is one of those buildings that have eight or so flats in a large building (the classic sitcom deal) where a condo is a bunch of rowhouses.

In the US the latter is often referred to as "townhouses" or "townhomes", which can be either rented or owned

Isn't language fun?

[Aaron]

In the US the latter is often referred to as "townhouses" or "townhomes", which can be either rented or owned

Isn't language fun?

When I was a kid they were called townhouses (I still call them that on occasion), some where in the last few decades they got a new name.

It may also be a regional thing. In BC, the term condo is used alot more.

[Edi]

See in Canada an apartment is one of those buildings that have eight or so flats in a large building (the classic sitcom deal) where a condo is a bunch of rowhouses.

In the US the latter is often referred to as "townhouses" or "townhomes", which can be either rented or owned

Isn't language fun?

Yes, it is. I suspect our Brits don't use the condo term much, as that seems to be particular to the US from what I've seen.

[Crazy_Vasey]

I've never heard the word condominium used in the UK. A quick google search lead me to a wikipedia page which says that an equivalent legal term was introduced in 2004, commonhold, but I've never heard that either.

Condominium is the legal term used in the United States and in most provinces of Canada. In Australia and the Canadian province of British Columbia it is referred to as strata title. In Quebec the term syndicate of co-ownership is used. In England and Wales the equivalent is commonhold, a form of ownership introduced in 2004 and still uncommon in most places.

So says wikipedia. For what that's worth.

[Broomstick]

I've never heard the word condominium used in the UK. A quick google search lead me to a wikipedia page which says that an equivalent legal term was introduced in 2004, commonhold, but I've never heard that either.

That's the reason for the US (and, apparently, some Canadian) distinction between housing types - it defines the legal terms of ownership of the property. It would surprise me if other countries have exactly equivalent types of legalities.

[Darth Wong]

Yeah, they use the word "condominium" around here in Toronto. I always thought it was amusing, the idea of living inside something that had the word "condom" in its name.

Never understood the need for a separate term. We don't have special words for houses that you buy, as opposed to houses that you rent. Why do we need a special word when it's an apartment?

[Broomstick]

Because one's legal responsibilities and privileges are different depending on whether it's a condominium, a co-operative housing arrangement, or a rental unit. (You don't hear "co-op" too often, but they do exist) In Chicago, in the more densely populated areas you can also have rented parking, or condominium parking where you own that slice of pavement or niche in a garage. I am not conversant on the details, but in the US condo vs. rental has significant differences regarding taxes, ability to rent the space out (subletting rental space vs. condos as rental property), and so on. Perhaps in other countries these distinctions are not as important as in the US, hence the lack of defining terms.

[The Big I]

On a different note is there any type of restriction on foriegners bying US properties???

You could just Google this to find out yourself since the answer will vary from state to state. . .

Why??? I want to be lazy its only so much you can look up on the work computer

[CmdrWilkens]

Following up a bit on what broomstick wrote the term exists for a legal distinction in property rights. Lets take a very common situation in mid-density suburbs that being a three or four story building comprising several dozen individual units, some parking, associated facilities on the parcel (maybe a swimming pool or tenis court) and quite possibly facilities within the building itself such as an HVAC system for the corridors, general security lighting and likely an elevator.

For a cooperative occupying a unit means that you have purchased a share in a corporation which owns the building(s) and surrounding property. Much as a share in a regular corporation gives you certain rights and privledgesthis ownership share grants you a say in hwo the co-op is run. In turn there is usually a continuing fee for right of individual access to a unit. What this means is that you are basically a stockholder in a real-estate company from which you also lease access to an individual unit. This means that you don't own real estate however you do have title to your share in the co-operative.

For a condominium you own the actual physical space the unit occupies as a piece of real property. You also hold, in common with all other units owners, the remaining common areas (the condo declaration which first establishes the property spells out where the property line for each unit ends and the common space begins). In turn you are granted a proportional share (depending upon if different units have different share weights or not for my paticular complex all housing units get 1 vote and each garage unit gets .125 votes) in the condominium association or corporation. This association, in turn, is responsible for the maintenance of the common areas.

An apartment is a situation of pure leasehold. Whereas with a condo you own real property and with a co-op you hold a share in the corporation an apartment holds no right of title. You have only the legal protections provided by law and in the terms of the lease agreement itself, in turn this means you have no rights to the property itself.

There probably should be some sort of linguistic difference between buying and renting a house however I would suspect, though I've not yet found data to support or deny this, that rental of multi-unit dwellings is much more common than rental of single-family homes.

[Phantasee]

CmdrWilkens's description applies to Alberta as well (although I've never dealt with a co-op, much less seen one).

But there's the linguistic part, as well as the legal part. My cousin owned a condo downtown, but we called it an apartment condo, because it was on the 5th floor of a multi-story building.

I lived in a condo for two years, but we were renting it (it was run as an apartment complex, but it was groups of four homes attached in a way so that the front of one house took up half a face of the building, while the other half was the side of the house next to it). It was really a townhome type of place, but it wasn't the typical apartment, so we called it a condo.

Of course, they started selling the individual units off as condos, and we had to move... but I think I know why it was called condos now: one of the buildings I managed last year was an apartment complex, 3 stories, 38 units in all. The thing was, when we went to convert it to condominiums so that we could sell the individual units, I learned it was already a condo corporation, and that one owner owned the whole building previously, like us, and just rented out all the units. So it was an apartment building, but really a condo corp. owned by one person who ran it as an apartment building. So the place I lived in as a kid was probably already a condo corp. but rented out as apartments. There was a light bulb moment!

[J]

Just to make things even more interesting, sovereign wealth funds are starting to buy up foreclosed homes.

link

LOST SOVEREIGNITY
OIL-RICH FUND EYEING FORECLOSED US HOMES
By TERI BUHL

There's a new land grab starting in America.

Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building - is now moving to scoop up tens of thousands of discounted foreclosed homes across the country.

One sovereign fund, said to have earmarked $29 billion to purchase foreclosed residential real estate, recently hired a West Coast mortgage broker and is starting to search for bargains, The Post has learned.

The search, which is being carried out, in part, by Field Check Group mortgage consultant Mark Hanson, who was retained by the broker, Steve Iversen, is concentrating on single- and multi-family REO (real estate owned) homes, or homes that have already been taken over by the mortgagee.

Neither Iversen nor Hanson would disclose the name of the client, but sources told The Post it's a sovereign fund.

The unidentified fund joins individual US investors, hedge funds and Wall Street banks in kicking the tires of REO homes, which have fallen in value so much that they are now tempting investments.

A sovereign fund would have two distinct advantages over other investors - the depressed value of the US dollar makes the homes a bargain, and sovereign funds have deeper pockets.

The sovereign fund of Abu Dhabi, for example, has a reported $875 billion in assets, while Norway has $391 billion, Singapore has $303 billion and Kuwait has $264 billion in their sovereign funds, which are funded by proceeds from oil sales.

The Abu Dhabi Investment Authority is expected to announce next month what type of US distressed assets they will be investing in and real estate is at the top of the list, according to a report in Financial Times last week.

ADIA did not respond to an e-mail question about REO investments.

So far, prices on bulk sales of REO properties vary based on location and are selling from 60 cents to 80 cents on the dollar. Hanson started out offering 40 cents on the dollar for about $2.5 billion worth of California properties owned by IndyMac and Washington Mutual but was turned down. The banks refused to comment.

Hanson is now willing to pay 50 cents to 60 cents on the dollar for a collection of California REOs worth at least $500 million.

In fact, this week Hanson's team negotiated a $2 billion package mixed with homes across the country for 31 cents on the dollar. While progress seems slow, Hanson reminds us this is only a nine-month old industry.

Some market experts think such deeply discounted REOs, like the deal Hanson just closed, are more fiction than fact.

"The size and discount of that type of deal isn't the norm yet," said Robert Pardes, with Recourse Recovery Management Services, a provider of mortgage advisory services.

"The critical mass of bulk REO is in well-capitalized institutions that don't need to sell yet in bulk at a deep discount because they are better off not taking substantial hits to the capital just to get the assets off their books,"

This may change, should the market become more crowded with bank failures and distressed institutions, he said.

Enoch Lawrence, senior vice president of CB Richard Ellis, says "This type of bulk buy would make an impact on the market. They are in a unique position because they have a long time horizon to invest and a cheap cost of capital. It's actually a perfect time for them to acquire these REO assets."

This throws another wrench into the works and adds even more complication to the process. With the housing market being essentially dead, banks may now look to foreclose fast and sell off homes to SWFs in an attempt to cut their losses. It's possible that troubled banks may try to foreclose as many homes as they can and dump them off to SWFs instead of trying to rework terms with the borrower.

[Phantasee]

Holy shit, they are going to roll the US housing market over and fuck it in the ass. I can't even begin to fathom the effects this is going to cause, if it's on the scale that article talks about. How many foreclosed homes can you buy for $29 billion?




*116 000, assuming quarter million average price (is this too high/low?)

[aerius]

Holy shit, they are going to roll the US housing market over and fuck it in the ass. I can't even begin to fathom the effects this is going to cause, if it's on the scale that article talks about.

Since you brought up ass raping, it kinda goes like this; imagine that the US is Ned Beatty and watch this famous scene from Deliverance.

[Darth Wong]

Holy shit, they are going to roll the US housing market over and fuck it in the ass. I can't even begin to fathom the effects this is going to cause, if it's on the scale that article talks about. How many foreclosed homes can you buy for $29 billion?

Enough to build a small Islamic republic in the middle of the United States