May 2008 Archives

The foreclosure process begins when a property owner falls behind on mortgage payments. In some cases, the owners of foreclosed properties have been struggling to make payments for some time, and the property may have been neglected due to the inability of the owner to meet basic maintenance expenses. Even in upscale neighborhoods, homes needing serious work are not uncommon. This may be the opportunity an investor is looking for. Houses needing work might fetch bargain prices and repairs can cut into profits, but it may be worth it. If the home is in generally good condition, is in a good location, and the cost of rehabilitating it for resale or rent are reasonable, then consider making an offer.

Last night I listened to a panel of real estate (investors) experts on television. They were discussing the residential foreclosure problems in this country and I was amazed at how, with the exception of one thing, little advise or help was given or touched upon for the distressed homeowner. Even the one thing that I thought could be of some encouragement when someone said to call your bank or lender and see if you can work something out. Although that is a true statement, the truth is that you need to know who to talk to; or better said: you should know who not to talk to.

Government tax foreclosure sales give you access to dozens of homes that have been foreclosed. When an abundance of foreclosure properties exist, such as the case at the present time, great deals can be found at reduced prices. Prices are reduced because there are so many foreclosed homes in the market now needing owners. Also, some of the properties may need a little "fixing up." These are the times to take advantage of tax foreclosed properties owned by the government because you end up getting so much more value for the price you pay.

One of the most important aspects of the American legal system - and a backbone of American commerce - is that the courts treat corporations much like separate persons. The government offers this opportunity as an incentive to those who want to participate in business endeavors and take full advantage of the special legal and financial perks extended to entrepreneurs and other business-minded citizens. Unfortunately, many conduct business but fail to understand the real purpose of incorporation. They think it is a way to feel more official, to secure a brand name, or to appease banks or investment partners. They miss what is perhaps the main goal of incorporation, namely to put distance between an individual and negative legal and financial consequences.

There are millions of homeowners behind on their existing mortgage payments that will result in as many as seven million foreclosures in the next three years. The outcome will be devastating to the individuals, the local community, the lenders, investors and the economy. A great number of those in danger of losing their home were victims of predatory lending or careless investor guidelines. Others suffered hardships such as unemployment, injury, death of a family member and poor budgeting. To complicate matters many have unwittingly been coached into simply walking away with the promise of a short sale, a lease-option and chance to re-enter the market in a few years. But do homeowners and real estate professionals alike really understand the long term ramifications that will impact the homeowner and the local community?

Thanks to the explosion of the real estate market a few years ago and the amount of people who are now defaulting on their home loans, the real estate foreclosure market is booming. Lenders granted loans for people with border line credit on the assumption that if they did have to repossess the house it would be worth far more than the mortgage. The lender planned on selling the repossessed property quickly and at a profit. That didn't happen.