Archives: 2007 November

Homeowners facing foreclosure should realize that companies or individuals who offer to help them financially are probably looking to increase their own real estate income, not to save their home or to purchase and rent their home back to them at a bargain price.

While the services offered by these companies may help to save your credit rating they are not designed to save your equity.  If you are facing foreclosure action you need to be talking to your lender in an effort work out of your situation. Do not sign papers with a “rescue” company, then go to your lender. At that point you likely no longer own your house. 

Investing Secrets That Quadrupled My Real Estate Income
By Marko Rubel

When I started buying foreclosures, I typically closed only one out of every five deals. Today, it’s closer to four out of five. The secret is really two secrets:

I learned all the options a seller in foreclosure has.

I mastered the art of positioning myself as the best of those options, getting the seller out of foreclosure with minimal damage to their credit rating.

This may not seem like much for you to do, but I assure you it’s made a major difference in my bank account! My six-figure income shot up to $1,348,000 in a single year. More recently, these secrets helped me make $180,510 in a single month. Here’s how it works…

Before you meet with an owner, it’s crucial to fully understand all the ways they can get out of foreclosure. Every owner facing foreclosure has the following options:

A surge in home foreclosures coming over the next year will cause U.S. property values to sink by $164 to $223 billion, with the most severe impact in minority communities, a new report says.

A new Center for Responsible Lending (CRL) study reveals that over two million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market.

The “Losing Ground” study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006. CRL finds that despite low interest rates and a favorable economic environment during the past several years, the subprime market has experienced high foreclosure rates, and they project that one out of five (19.4%) subprime loans issued during 2005-2006 will fail.

The CRL report examines factors that drive subprime foreclosures. These include adjustable rate mortgages with steep built-in rate and payment increases, prepayment penalties, limited or no income documentation, and no escrow for taxes and insurance. CRL also determined that these factors cause a higher risk of default regardless of the borrower’s credit score.

In addition, the CRL study finds that recent high appreciation in many areas has masked problems in the subprime market, and that the cooling housing market will cause failure rates to rise sharply in many major markets. California, Arizona, Nevada, and greater Washington DC will be especially hard hit.

Wachovia, the nation’s fourth-largest bank joins the subprime mortgage mess parade. Wachovia announced  that the complex debt instruments it has in its portfolio declined in value by an estimated $1.1 billion before taxes in October, leading to $600 million loan-loss charge for the current quarter.

Wachovia joins a growing list of banks, including Citigroup, the nations largest, in reporting massive losses stemming from their portfolio of complex debt instructions tied to the subprime mortgage market market.

The large number of non performing loans and foreclosures in this asset class has caused havoc in the mortgage industry and on Wall Street. The really surprising thing, however, is not that so many loans to people who have such a poor ability to repay are turning sour. This was entirely predictable.

The real surprise is that lenders that are supposed to be prudent evaluators of risk became so greedy to earn fees from making any kind of loan that they basically suspended their lending guidelines. For awhile it seemed that anyone who could put an “X” on a loan agreement was able to secure loans of such size that an eventual default was almost assured.

While the US government and lenders are hard at work trying to figure out how to contain the mortgage mess to the housing industry the combination of the subprime mortgage loan disaster, crude oil going to $100 a barrel and beyond, the cost of paying for wars without end, gasoline at $3.00 a gallon heading for $4.00 and beyond, run away inflation in food prices, and a collapsing Dollar, will very likely be too much for any government pronouncement that everything is OK or rescue program to overcome.