The Folly of Banks

Bank Bailouts. You've heard about them. You're angry over them. And most of your voting next week is probably going to be heavily influenced by them.

In case you were wondering, the price tag for all those bailouts was $204,808,576,320. Just to clarify, that is over $204 BILLION dollars. Not used to seeing that many numbers stacked together? Me either. Pretty startling, huh? And if you're curious to see who received our money and how much, click HERE.

CitiGroup and Wells Fargo remain the biggest beneficiaries of the bailout with each receiving $25 billion which they have not yet paid back. Citi has parlayed that bailout into profits of $4.43 billion (Q1), $2.7 billion (Q2), and $2.15 billion (Q3).

Almost as egregious as the money sent to bailout banks has been the amount of funds drawn from the Treasury by mortgage giants Fannie Mae and Freddie Mac. That sum stands at $148 billion and could more than double in the next three years, according to the Federal Housing Finance Agency (FHFA).

Those are the facts. On their own they are probably enough to convince you of the accuracy of this blog title. But there is more. Every day, banks lose tens of thousands of dollars on each property they foreclose on if they refuse to negotiate a short sale. And they often refuse to negotiate short sales.

NOTE: According to CDPE.com, 7 out of 10 homeowners facing foreclosure never speak to a real estate professional, so it is not all the banks' fault. If you or someone you know has started to miss mortgage payments, please call me (850-251-6643).

So back to the folly of banks... Here is a case in point. I recently listed and sold a foreclosure at 3008 Huntington Woods Blvd. It was a quaint, if outdated, 1398 sq ft home with 3 bedrooms, 2 baths, and a 2 car garage. Before it went into foreclosure, the house went under contract as a short sale at $135,000. Nonetheless, the lender refused to consummate the short sale and proceeded with foreclosure anyway. Four months later, I sold the house for....

$115,000. Yup, that's right, $20,000 less than their contract price from just four months earlier. It happens every day and for those banks that took taxpayer money, it costs us. That, my friends, is the folly of banks.