You’d have to be living in a cave not to know this one. Liberal lending standards from the past several years led many consumers to borrow more than they could afford. Let’s just get to the point… stupid loans! At one point, there were over 150 different types of mortgages. Some lenders gave home loans to people, who under more conservative past standards would never qualify for a home loan. These home buyers enjoyed $0 down mortgages, no-document loans, adjustable rate mortgages (ARMs) with unrealistically low “teaser” rates on the front end, 106% loan-to-value (LTV) loans to allow for NO CASH closings, and even 40-year mortgages! Then when interest rates rose (even slightly) above the “teaser” rates, home owners with zero equity in their homes could no longer afford to pay the new higher mortgage payment. And now that the mortgage industry has been devastated by the fall-out from their overly-aggressive programs, they have finally “gotten smarter.” The result is totally different lending policies and a tightening of their financial standards. As a result, most of these troubled homeowners are unable to qualify for a new loan! Of course, more and more homeowners are at risk of defaulting and are facing foreclosure. These homeowners are looking for solutions to be able to stay in their homes longer. One such solution is bankruptcy. The bankruptcy market is not just growing, but growing at an alarming rate! The American Bankruptcy Institute predicts up to 1.5 million new bankruptcy filings in 2009. These homeowners need our help!
Record Foreclosures. This is front page news. Right?
Declining home values. As we just pointed out, the mortgage meltdown led to record levels of foreclosures. All the foreclosure sales, short sales, and discounted “fire” sales have led to declining values… at an alarming rate.
Economic Recession and Massive Corporate Layoffs. We’ve seen layoff announcements for thousands of employees at 3M, American Express, Caterpillar, Chrysler, Emerson Electric, General Motors, Hewlett Packard, Microsoft, United Technologies – to name just a few. Add to those numbers bank employees, as the Federal Government closes financially troubled banks.
Record Unemployment. Of course, the economic problems leave 14.5 million Americans out of work. That’s nearly 10%… and a rate we’ve not seen in the past 25 years. Clearly, mortgages are going unpaid, foreclosures continue to rise, and homeowners know that filing bankruptcy can allow them to stay in their homes longer. Who can blame them for wanting to stay in their home? Unfortunately for our economy (but fortunately for those smart enough to take action on good business opportunities), all the experts agree… it’s going to get worse before it gets better. Specifically, bankruptcies are going to continue to rise through 2013. So how can YOU and your real estate investing business benefit by these circumstances? Be honest, would you like to contact these motivated sellers to rescue them on the front end of their troubles? And you can contact them and do it before anyone else knows about them! And this is the business model we recommend.
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