Foreclosure Help You can Provide for a Short Sale as an Investor
By Charles L Harmon
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This is almost the middle of 2010 and home prices are starting to go back up and foreclosures are still in record numbers. That is my area of Southern California. Other locations may be experiencing something. Things can change rather fast so when you read this the situation may be entirely different,
You know there is a lot of trouble in the economy right now, much of it centered on homes in foreclosure. Help homeowners out by becoming a short sale investor. You can actually do your part in turning the economy around and develop a strong investment portfolio on your own when you provide foreclosure help.
Foreclosure help starts with understanding the short sale process.
Historically, homeowners got in trouble when their economic circumstances changed dramatically. For instance, when a man got laid off his job, the family could no longer afford the mortgage payment and the house would go into foreclosure. Other times, extraordinary medical bills would take up so much of the family budget that they could no longer afford the home. These circumstances were limited in scope and there was not much need for foreclosure help.
But, during the first years of the twenty-first century, something dramatic changed in the mortgage lending industry. Home prices were rising so dramatically that mortgage lenders were willing to take risks in writing loans. They developed instruments such as stated income (“liar”) loans or no doc loans, adjustable (“teaser”) rate loans, and interest only loans. The idea was that if the homeowner couldn’t afford the home after the mortgage reset in two years, they could either refinance or sell it. As long as home prices were rising, there was no problem.
[note] Foreclosure fore·clo·sure n.
The act of foreclosing, especially a legal proceeding by which a mortgage or Trust Deed is foreclosed [/note]
But when the housing bubble burst, suddenly there was a great need for foreclosure help. Homeowners could neither make the payments on their homes nor sell the homes for a price that would pay their mortgages.
At first, lenders were quite unsympathetic to the homeowners’ plight. But, as the banks began to develop large portfolios of bank owned homes, they began to see the homeowner’s troubles and their own. Everyone – the homeowners and the banks – needed foreclosure help.
This is where the short sale investor comes in. You will purchase a home in pre-foreclosure for a discounted amount. The homeowner is let off the hook. They leave the home in good condition without having a deficit judgment entered against them. The bank gets the maximum amount on the home (even though it is not the full value of the mortgage) while not having to go through the legal process of foreclosure or having a bank owned home on their hands.
You should know that when you try to provide the foreclosure help of investing in a short sale property that there are pitfalls. As many as eighty-five percent of such deals fall through. This may be because investors simply do not have the education and knowledge they need. It also happens when the investor cannot line up the financing they initially thought they had.
If you can become a short sale investor, you will be doing a world of good by providing foreclosure help. In the process you can also make a profit for yourself in the way of a good deal on a home at bargain price.
