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February 11, 2011

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Laura Roderick

Dick:
as an added comment/curiosity: to what degree do you feel that the perpetuation of insurance coverage and property taxes (in the case of defaulting home owners remaining in occupancy,) has an impact on the expediency with which the banks are moving on the foreclosure process? Once empty, those assets are all un-insured (potentially)with a accumulating tax burden once foreclosed on, too.Wondering about your opinion on this factor. At fist glance, it would be a pretty ugly expense to bear.Thoughts?

Dick Lepre

Laura,

I do not believe that this makes a big difference to the banks which will eventually own the properties. They are better off paying taxes so as to avoid penalties. The cash necessary to maintain tax payments and insurance is small compared to the cash which banks currently possess. The taxes must eventually be paid. As for insurance, if a bank owns enough properties it may make no difference whethre it insures or does not insure the properties because the expense is likely to be identical in either case.

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