Tuesday, February 26, 2008

Foreclosures up 57%, How can you profit from it?

According to the Statistics provided by RealtyTrac.com, the number of notice of defaults has substantially risen once again. In January of 2007 there were 148,425 default notices given to borrowers. This year there were 233,001 notices given. 

California alone accounted for almost 1/4th of all default filings. It had 57,158 foreclosure notices distributed in January. 

More and more homes aren't being purchased at the foreclosure auctions, and become REO Homes. This  offers great opportunities for savvy investors and ordinary home buyers. A lot of these homes aren't being picked up by investors because they simply don't have any equity, and there is no profit in these foreclosure homes. At foreclosure auctions, the opening bid is usually the amount owed on the primary loan. When this loan amount is more than the property is worth, it won't be purchased on the court house steps. 

How to Profit with Foreclosures without Equity

Short Sales
The best bet for savvy investors is to purchase the properties as Short Sales before the auction even occurs. Banks don't want to foreclose, and are often willing to accept less than the amount owed on the property to avoid foreclosure. Good Real Estate Investors contact owners of these homes when they receive their default notices, before most of these homes are even on the market or have any other competition. Lists of default properties can be found from services like RealtyTrac, Foreclosure.com, and Bargain Homes Network


Deals at Foreclosure Auctions - Homes with Second Mortgages
When deals can't be negotiated with the distressed borrowers and the banks in preforeclosure, many houses can also be purchased at great discounts at the foreclosure auction. The best properties to try and buy at foreclosure auctions are those with second, junior liens. Over the past few years a popular trend for lenders was to offer 100% financing by using 80-20 loans. in an 80/20, the primary loan was for 80% of the homes value and the second loan was for 20% of the purchase price. At the foreclosure auction, the second loan will be eliminated, lost, shafted. These properties can usually be picked up for a little more than the value of the first loan, which at one time was 80% of the properties value.

REO Homes
Bank Owned/REO Homes can rarely be purchased for huge discounts, but are much more easy to purchase than short sales and foreclosure auction homes. REO properties are listed just like any other properties. They are usually priced below market value because banks want to get rid of them quickly, and they usually need some repairs. These properties are found on the MLS, and you get the aid of a Realtor to help you in your purchase of REO Homes. This is usually the only way to purchase foreclosures as first time home buyers.

Find REO Homes on the MLS Now:

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Friday, February 15, 2008

Top 20 Metro's for Foreclosures.

4% of homes in these metros are in some stage of the Foreclosure Process. The highest foreclosure rates are in metros where homes appreciated too fast, like California, Las Vegas, and Florida, or areas where economic market conditions really struggle like Detroit and Cleveland Ohio.

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Tuesday, February 12, 2008

"Project Lifeline" Lenders New Plan to Reduce Foreclosures

The US Treasury department announced a plan known as "Project Lifeline" designed to help give distressed homeowners more time to work out payment plans and prevent foreclosure. Bank of America, Citigroup, Countrywide Financial, JPMorgan Chase, Washington Mutual and Wells Fargo have agreed to allow delinquent homeowners facing foreclosure a 30 day period to work out new payment terms. During this period, the banks will attempt to contact the distressed borrowers, and will "freeze" the foreclosure process while they attempt to find a repayment solution.  Borrowers with both fixed and option arm loans for primary residences may qualify for Project Lifeline. 

Many economic experts are  skeptical that Project Lifeline will actually make much of a difference. Distressed homeowners are only eligible for this program after they've missed three mortgage payments. This is the time that most lenders issue the Notice of Default.

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