| With the housing market cooling and demand
for mortgage loans shrinking, banks and other lenders are turning to
nontraditional and sometimes riskier mortgages to bring in
additional business and make up their dropped off business.
Many lenders have turned to mortgage products designed to lower
monthly loan payments and to help borrowers qualify more readily for
larger loan amounts, while others require little in the way of
documentation during the approval process. These loans do make it
easier for some people to get mortgages, but they also can raise the
possibility that some borrowers may end up in foreclosure. For the
real estate investor or home buyer these market conditions represent
a window of opportunity
As housing monetary value appreciation rates slow, more mortgages
going into default. Foreclosure notices has edged up in recent
months, providing yet Another sign of a cool down in the real estate
market across the U.S. For example in San Diego County, CA. Banks
and other lenders sent 1,266 letters of default to borrowers in the
third quarter, a notice that gives homeowners 90 days to become
current on payments before moving towards a foreclosure auction.
At the height of the real estate boom, the double-digit rises in
home equity meant customers could pull out monies from the increased
home equity to bask a life style that they could really not afford.
Flush with the ability to tap into home equity loans, homeowners
have pulled out cash to purchase new cars, furniture, vacations and
other luxuries. Another boost to their life styles was rendered when
homeowners refinanced using adjustable-rate mortgage loans that cut
their monthly payments.
But now the conditions are changing, in many areas of the country
real estate price levels are flattening out and even not rising in
some real estate markets. With little or no increase in home equity,
or even vanishing equity, homeowners could find themselves in a
tight spot.
Additional forces are also having an impact on the housing market:
New federal laws regarding credit card payments have passed to an
increase in the minimum payment mandatory on credit card debt. For
many people that payment will now be twice what it has been in the
past. And, as energy prices and health care costs continue to march
upwards to new all-time highs. Growing numbers of people are in
financial situations where moines spent are exceeding monies earned.
For the first-time real estate investor or seasoned veteran, the
current market conditions are a window of opportunity for those
shopping to buy real estate property just before foreclosure. A
growing number of homeowners have withdrawen all their equity
(sometimes as much as 110% of their home's value.) and now house
values have turned down and they are upside down -where they owe
more than they can sell the house for. Trapped in a situation where
they can't pay their debts and they can't find a buyer for their
home, real estate investors who understand the default process can
offer a solution that offers the homeowner in default a way to
escape from their mortgage payments and for the investor a way to
secure a property in the process.
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