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Daily Archives: September 8, 2008

US subprime crisis: all aboard the foreclosure bus

by Nathalie Laville*

Have a little money saved up? A few hours to kill? Why not take a new kind of tour — to peruse the bank-seized properties of homeowners fallen on hard times?
The tour is free, soft drinks and donuts are included, and you might just make a killing on the wounded US real estate market.
"Hi, how is everybody doing today? I am Tommy and this is Sheri," said Tommy Burch, a real estate agent who with his wife has been conducting three-hour "Foreclosure Bus Tours" every weekend for the past four months.
"We have got about 12 to 14 properties we are going to see today. We are going to try to keep moving very quickly," he said, addressing his passengers from the front of the 12-seat bus, just like a tour guide.
The Burches have an unusual criteria for selecting properties to show: all of them have been seized by the bank.
Months, maybe weeks ago, these homes were still inhabited by families who fell victim to the inflated prices and risky lending practices of the US real estate boom.
Now the banks that repossessed them, in a desperate search for cash, are selling them for a song.
Buyers are making out like bandits, according to Tommy Burch, who has been in real estate about a decade. The prices of properties on his tour have plunged 40 percent in one year.
"I had no idea that in such a nice location, I could get a house for a price that is half of what it was just three years back," marvelled Pankaj Giroti, a management consultant in search of a deal.
The idea for the bus tours came to the couple when they themselves were looking to buy one of the spacious homes in this far-flung Washington suburb.

There is a sad story involved
"A lot of these foreclosures don't even have signs up saying that they are foreclosures, and they are gone in a day," Tommy Burch said.
"So, it's difficult to find them, and when we do, it's hard to work with the banks to get our contracts approved. So, we decided that if it was that hard for us to do, how hard it was for everybody else to do it."
According to real estate data firm RealtyTrac, 2.2 million foreclosure procedures were filed in 2007. And foreclosures soared by 121 percent during April to June this year compared to the same period a year ago.
The Burches visit up to 80 properties before a tour, compiling photos and data on selected houses into brochures for their tour participants.
During the tour, they answer questions and educate would-be buyers on how to go about buying a home from a bank.
"They make it very organized and it's kind of fun, you know, to go on the buses to see all the properties," said Eva Chen, who came with her husband and son.
"It does save me a lot of time instead of actually contacting all the agents to go through these properties," said Gary Chu, Eva's husband.
One or two contracts are signed after each tour, Tommy Burch said.
The Burches's bus is red and blue, with a caricature of the couple painted on its side: her, blond and blue-eyed with pig-tails; him, a brunette with a brush cut, holding a tiny house with a smiling face and outstretched arms.
They are trying to add a lighter touch to what otherwise might be seen as a morbid fire sale.
"If you put it into a light where you look at this house, and you say, somebody used to live there and they lost their home and they lost everything, it's really hard," said Tommy Burch.
"But we want to make it an enjoyable experience, and fun, and a great opportunity for new people to have a home themselves that maybe couldn't afford a home three years ago," he added.
One man's tragedy is another man's opportunity, as potential buyers wander through the empty homes, inspecting every room, opening every cupboard and closet.
"Yes, there is a sad story involved if you are to see a foreclosed house. But, if you really look at it from an investment perspective, you know, it's (like) any other business," Giroti mused.

Urgent inquiry as more personal data missing in Britain

An urgent inquiry was underway in Britain yesterday after a disc containing the personal details of 5,000 justice staff went missing in yet another embarrassing data loss blunder.
Those affected are employees of the National Offender Management Service (NOMS), who may include many prison officers.
"We believe nearly all of this data related to financial information — for example, invoices from Prison Service suppliers," said a Ministry of Justice spokeswoman.
"However, we believe there is also a limited amount of personal information on around 5,000 NOMS employees including their names, dates of birth, National Insurance numbers and employee numbers."
According to a letter obtained by the News of the World newspaper, which it published yesterday, private contractor EDS told the Prison Service in July that the hard drive had gone astray. The missing disc was last seen in July 2007.
"I am extremely concerned about this missing data," Justice Secretary Jack Straw said in a statement, adding that he was only informed about it on Saturday.
He said he had "ordered an urgent inquiry into the circumstances and the implications of the data loss and the level of risk involved.
"I have also asked for a report as to why I was not informed as soon as my department became aware of this issue. My officials are also in touch with EDS as part of these processes. We take these matters extremely seriously."
The news is the latest in a series of revelations in the past year of government data security blunders, with the Ministry of Defence (MoD) last month admitting that more than 700 laptops had been lost or stolen since 2004.
Last November, the government admitted it had lost confidential records for 25 million Britons who receive child benefit payments, and in January, the MoD revealed that a laptop with details of some 600,000 people interested in joining the armed forces had been stolen from a naval officer.
And the interior ministry admitted Thursday that personal details relating to every criminal in England and Wales had been lost.
PA Consulting informed the Home Office earlier last week that a computer memory stick which also contained information about thousands of prolific criminals was lost by the contractor.
The memory stick contained data on all 84,000 prisoners in England and Wales, as well as information from the Police National Computer of around 30,000 people with six or more convictions.