Tagged: Real Estate

Meet Willow Tufano, age 14: Lady Gaga fan, animal lover, landlord.

In 2005, when Willow was 7, the housing market was booming. Home prices in some Florida neighborhoods nearly doubled from one month to the next. Her family moved into a big house; her mom became a real estate agent.

But as Willow moved from childhood to adolescence, the market turned, and the neighborhood emptied out. "Everyone is getting foreclosed on here," she says.

After the collapse, Willow's mom started working with investors who wanted to bid on cheap, foreclosed homes. Sometimes Willow tagged along.

Not everyone wants to buy a mold-infested foreclosure, but Dan Grohs does.

He and his Realtor are walking through a three-bedroom house in Minneapolis. The copper pipes have been stolen by vandals and the heat doesn't work, but Grohs recently bid on the house — and he sees potential.

"It's got a nice flow to it," Grohs says as he moves through the home. "You walk in — living room, dining room, kitchen. Good spacious rooms."

The bank that owns this foreclosure wants about $48,000 for it, but Grohs has offered $40,000 in cash. If the deal goes through, he plans to renovate the house and resell it. That's how he and his brothers make a living, and Grohs says they've probably made more than 500 cash deals over three decades.

A year ago, banks admitted to abusing the foreclosure process — using fake signatures to power through foreclosure documents — a practice known as robo-signing. Now, five major banks and more than 40 state attorneys general have agreed in principle to a broad settlement that they say will help homeowners.

But some states, including high-foreclosure states like California and Nevada, have been holding out and negotiating for a better deal. They're concerned that the agreement wouldn't help consumers enough, and banks would be immune from future lawsuits. Late Wednesday, there were wire-service reports that the holdout states were close to a settlement deal that could be announced as early as Thursday.

Freddie Mac, a taxpayer-owned mortgage company, is supposed to make homeownership easier. One thing that makes owning a home more affordable is getting a cheaper mortgage.

But Freddie Mac has invested billions of dollars betting that U.S. homeowners won't be able to refinance their mortgages at today's lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom.

These investments, while legal, raise concerns about a conflict of interest within Freddie Mac.