Pocket Listed REOs, Ideal for Reclamation / Squatting
I wrote this Sunday morning and accidentally posted it with the title and handle transposed. I really do think this is valuable information I'm sharing and I don't want it missed by people thinking its silly internet gossip about a handle they aren't familiar with so I'm reposting and including the comments others left on the original article on the bottom. I'm leaving mine out, I need to go and its not showing up on the post yet.
Anyway please note any questions and I will answer to my ability but I would like to re-iterate that I am not offering legal advice, I'm not a lawyer and I don't even play one on TV. I actually just barely have both my GED and Diploma (long story.) My advice is from years of study and interest in this subject but does come with a double your money back guarantee if you aren't satisfied. My level of interest in this subject can only be explained by my handle. I'll only be checking the email below for the next week or so.
I was very excited today to hear something locally about house reclamation and was willing to stand in the very cold park for hours to hear a wonderful but short presentation about it. I have a few thoughts about this that I'd like to share, namely about ethics. I have no degree or anything but I have a great deal of knowledge about landlord/tenant and eviction law, real estate law, and foreclosures, in that order. I've.. read up on this. A lot. I also have lots of theories about the bubble, crash, etc.. I saw them coming but no one would listen to me.
With the understanding I have of how all this works I could easily understand how having squatters in property you own can be FINANCIALLY DEVASTATING. I'd like to show a few scenarios that might make people want to think about the selection process more and concentrate their efforts on homes actually owned by the banks. This is because I want to save families from this trauma and dish it on the banks more.
First of all, I understand that there are a number of reasons an individual or a family that owns a home will leave it vacant throughout the foreclosure process and still be trying to save their credit so they can be homeowners again someday. There are enormous tax benefits to home ownership and nothing beats the freedom and stability; paint what you want, get a dog if you want, never have to worry about having to move on a landlord's 30 day whim. The dreams of such people could quickly be crushed if their home was "reclaimed."
Imagine a family provider just lost their job. They drain their savings and search and search and find something but its in another city. They move to the new job but the cost of the move puts them a month behind. Every month they are sending a payment to the mortgage company and saving a little to eventually pay the month they are behind but are listed as pre-forclosure because they are more than 30 days past due. Some banks will accept the March payment in April, some will not.
They put their house on the market in the hopes that it will sell and they can use their equity to buy a house in the new city. They can't drive up to look at the property well, and the real estate market is doing so poorly its rarely even shown. It would be easy to "reclaim" this house, but at this point you're squashing the families dreams of buying a house again because very few people will buy a house full of people refusing to leave. You are forcing the family into foreclosure, where they will almost surely loose not only loose any equity they were hoping to use as a down payment on a new house but end up owing the bank, and repaying through judgement and garnishment, when their house is sold on the courthouse steps.
Someone I talked to at the rally said that if a house were reclaimed and it was hurting a family this way they could just knock on the door and the squatters would leave. If this were me, I would certainly try this but you have to keep in mind many very good people are very paranoid of the culture surrounding activism, the homeless, or both. Many people would never think to go try to talk to the people in the house directly and if they seek council, recommended for first time evictors, they will likely be told to have no contact with the tenants (why should you do it when I can do it at $200/hr?)
I think a much better option is to go after REOs, real estate talk for owned by a big nasty faceless bank that already took it from a family. Many, many houses have REO advertised right on the for sale sign. Any serious buyer is very weary of REOs for reasons I won't ramble about unless someone is interested in buying a house, in which case I warn them about it but there are real reasons that could fill up an essay this size why these properties sit on the market for a long time at 20% off regular price usually.
More and more REO properties are "pocket listed," a shady practice of realtors that is not in the best interest of sellers. I reckon this is because, like all of us, they don't mind ripping off a big company as much as an individual.
I know this must be boring to you guys who aren't fascinated by real estate like I am, but I must explain pocket listing for you to understand this is what you want. Sounds secretive, eh? It kinda is. If someone sells a property, they usually want it on the MLS so anyone seeking Xbr/xba in 972XX for XX-XX will get it on a list if they ask any realtor. If the person walks into realty company A and company B put the sign out front, they each get 3%. If it was pocket listed, the house would only come up in search if they happened to approach the company on the sign. I've heard of deals not going thru because realtors in the same office didn't' want to split commission. Basically the only way it will sell is if someone finds it on that company's webpage or walking around, no realtor is going to offer it to them if they won't get commission. When the pocket listed property sells, they get double.
Its really easy to tell if a property is pocket listed. Hints, but not guarantees of pocket listings are things like "exclusively offered by.." on the sign. An easy way to check is to try to find it on MLS.com. If its not on MLS, its pocket listed. I don't see why banks don't require MLS listings on their properties.. I did when I sold one.. but having a deep understanding of all this I've seen banks do much stupider things.
Its also a good idea to check the responsiveness of the realtor. Call and pretend to be interested in the house, sounding as professional as you can. If they don't call you back, they probably won't call anyone back and they're probably "saving" it for someone. Its not unheard of for realtors to let an REO sit for months and months, intentionally not calling anyone back who wants to buy it, so the bank will lower the price and they can sell it to someone who they've already cut a deal with. The real estate Jedi who taught me called this "pocket-lenting" like the stuff in your jeans pocket. Sometimes a realtor will bend over backwards to not call you back, and our research shows this has almost always been for an REO, which I refused to buy anyway.
A pocket listed REO, is, in all likelihood lost in the lint. It seems like every time I see one they have a broken window and I call the city to complain and the city doesn't know how to take a complaint; they just tell me its owned by a bank. This is OUTRAGEOUS! So if a family is struggling and the exterior of their house looks shabby, a code enforcement officer will rush to the scene to ticket and threaten them, but if a bank in NY owns it the city doesn't even try to seek fines for the eyesore? Don't get me started on that, its another essay entirely.
Another thing that I don't understand is how banks are getting people out so quickly. There was a lot going on in my personal life when I heard whispers of banks throwing people out who had been paying a landlord who they didn't know was paying the mortgage, much more quickly than my very extensive knowledge of landlord tenant law allows even if they had refused to pay rent to a person who owned the house. I don't know why this is, or where I can take my sign to show I don't like it. I know you guys are not the biggest fan of private landlords, they are short on fan clubs overall, but not all of them are the devil and certainly banks should at least have to follow similar rules as they do!! I've heard whispers of banks throwing people out who had already paid their rent to the landlord, I reckon this was more through intimidation and threats than anything legal or official but it still makes my blood boil.
I thank my lucky goddesses every day that I have stable housing, but if I reclaimed a house and received an eviction notice I would look at who signed it. I cannot, for the life of me, understand why a bank would serve an eviction on a reclaimed house in pre-forclosure. I would be very interested in hearing about any instances of this happening. Someone has to go down to the courthouse, get frisked and detected, fill out a stack of paperwork thicker than a dime and pay almost $100 to file an FED. If the person who did this is the person whose name is on PortlandMaps, the owner is trying to sell it before it forecloses and you are burning THEM and their hopes of selling before foreclosure. Even if its not them, the name is probably their lawyer. Even if you don't get an eviction notice, it would surely startle a realtor and scare off almost any buyer if the realtor said it was vacant and they got there and it wasn't.
Finally I'd like to tell a short story about a reclamation I saw 2nd hand that happened right here in Portland. I noticed an eviction notice on the door of a house under John and Jane Doe so I kinda watched it. The Doe's didn't have electricity but they stayed at this house for at least a year, apparently its REALLY hard to evict someone when you don't know their name. I don't know.. I haven't tried. I reckon it would also be hard to evict someone for nonpayment if they never agreed to pay..the only course of action I could see is 30 day no cause, but again I'm no lawyer. I'd really like to hear how the eviction process has started out in these cases. Anyway I'm sure the Does enjoyed this lodging without anyone worrying about a troublesome eviction on their record, having such a common last name and all.
I wonder if this applies to REOs but private landlords usually don't leave the water off at rentals. There is a monthly fee you must pay if you own property hooked up to the water grid regardless if you use a drip or not, so I don't see why anyone would turn it off. I tried to to avoid paying $40 for nothing, they simply won't let you do it. If it has been shut off it was either done because of a leak inside or nonpayment, I would reckon. Or maybe another benefit the city of portland gives REOs that private land owners simply do not get (more grr)
I think if widespread reclamation of REOs could only bring good. Maybe the banks would have to hire people in town to keep an eye on their properties. Sounds like a few jobs. Good. Maybe they'd be less willing to foreclose knowing they might have to evict a group of crazy kids. Super. Perhaps knowing this they'll be a little more flexible with the people who are trying to catch up on house payments knowing they'd rather deal with a nice family than a bunch of angry activists with bullhorns. Super!
I've heard there are groups that are reaching out to pre-foreclosure families and encouraging them to fight back. I have the knowledge, time, and intreats in helping them, but I cannot remember what they are called.
Finally I'd like to offer my kudos to Right2Survive. This is the first time I've ever been to a rally where I didn't just feel inspired and empowered, but educated! I never before wish I would have brought something to take notes to a rally!!!!! Wow guys, where can I sign up to be sure to make it to the next one? And if anyone is still reading, I'm curious if anyone is even vaguely as interested in this subject as I am, please note. You can write me at email@example.com and I'll check it for a few days, but for obvious reasons I don't want to use my regular email for this that brings my facebook/myspace/etc up.
Comments from Original article
hooray for brain-overload insomnia! 02.May.2010 14:00
this is a great article! thanks for passing on valuable info...let's get squattin'!
Wonderful 02.May.2010 14:20
This is great, thank you very much. I have been dealing with a similar situation for the last few months.
Some Good Advice 02.May.2010 21:43
While I agree we need to be focusing on taking back properties from the banks, until we re-evaluate our relationships to property and capital, not much will really change. Banks and other profiteers will continue to use our basic needs for shelter and warmth as a means to extract cheap labor from the masses, and keep us jumping through the same old hoops just to survive.
It seems to me that this leaves us with a difficult choice.
We can make half revolutions. We can try not to hurt the people who perpetuate these unhealthy relationships. The ones who move away and refuse to make a stand in the hopes of being able to continue playing the game. We can try not to mess with the little guy who just owns two or three houses, just trying to make a buck.
Or we can get to work on crashing the whole thing.
But I don't know if we can have it both ways.
However, this is good dialogue, and I sincerely hope it continues.
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