I attended a packed meeting of realtors and lawyers this morning on the subject of mortgage foreclosures and short sales. A foreclosure, whether by auction of “strict”, where the borrower’s right of redemption is judicially extinguished, ends up with full title in the bank. A short sale happens when the owner sells to a buyer full title to the property, with the bank signing on for less than it’s owed. Either way, the borrower/owner loses his house, but what are you going to do?
There was talk of a mortgage mediation program, on which I’ll write later. Of interest for now is that mortgage foreclosures have doubled the past year, with no end in sight. And short sales? As Gene Marconi, chief counsel for the Connecticut Association of Realtors said, “I grew up in Torrington and cut my teeth on short sales. never, not once in my career, did I ever think I’d be here in Greenwich discussing short sales.” Well now he is. There are some interesting opportunities for buyers out there, and more coming each day.
And as an aside, before I receive any more angry comments deploring bottom feeders profiting on other’s misery, please read this Bloomberg article on cash-rich companies swallowing their weaker competitors whole. IBM, for instance, is bidding for Sun Microsystems.
March 18 (Bloomberg) — U.S. mergers and acquisitions may stage an unexpected recovery as International Business Machines Corp. and companies with cash prey on rivals struggling with depressed stock prices, bankers and lawyers said.
“Clearly this is the time to make an acquisition if you are a company that has the cash,” said Frank Aquila, a partner at Sullivan & Cromwell LLP in New York. “The best returns have come from acquisitions done during an economic downturn.”
It’s not nice, but if you’re solvent when much of the world isn’t, why not take advantage of your good fortune?