Housin Trend: Buy REO & PAY CASH

Riversider:

One reason that cash sales have increased as a percentage of overall sales is that many
REOs are being sold for amounts that banks would not finance even when markets were strong
because transactiob origination costs are too high relative to loan amount.

In 1988, the head of NE regional lending for a large institutional lender told me that it
cost his bank $1000-$1200 to originate a simple Coop loan.

Very few banks will lend less than $40-50k because of both origination fee cost and servicing
costs: since it essentially takes the same time and labor cost to service a $300,000 loan as
it does to service a $30,000 loan. lenders are better off having fewer larger loans than a
larger # of smaller ones.