Matt Taibbi: From an Unlikely Source, a Serious Challenge to Wall Street

[Orrex]

27. The fair market value of a foreclosed home is often a tiny fraction of its full sale value

I've seen $50K homes sold for $1,000 at auction, and the banks have accepted these bids; ergo the banks have set fair value at $1,000.

For that matter, what the bank considers fair value isn't even necessarily a factor. Individuals whose homes have been seized have often tried to refuse the offered amount, regardless of how "fair" that amount might be, and cities have nonetheless successfully seized those properties.

The fair value of an abandoned property can be even less--I'd put it at about the cost of demolition, tops.


I don't see how the debt to the mortgage company is a factor either, to be honest. If my home were encumbered with a double mortgage and the city wanted to seize it, the city wouldn't pay off my double mortgage, nor would they simply turn away because a lender is standing there with its hand out. They'd offer fair value for the property itself, and the underlying debt is irrelevant to that valuation.