Here’s the biggest foreclosure problem as we see it.
[tag-tec]Distressed homeowners[/tag-tec] who have absolutely no equity in their properties, yet they have borrowed against their homes in order to pay off credit card debt or to remodel.
Now they are holding exploding mortgages with nothing to fall back on.
This is a particular problem for new immigrants such as Latinos. More and more of them are finding themselves in serious trouble because of sub-prime loans.
Some claim they could not understand the fine print of their mortgages because they do not speak English well.
However, as we pointed out last week, we think the new bill the House passed will further aggravate the situations of such distressed owners rather than help them.
Tightening the credit will prevent more new homeowners from getting the loans they need. That’s the tragic end to it all.
But as always, it presents opportunities to the savvy real estate investors.
We honestly think REO’s will be a good market for 2008-2009.
As we’ve also said before banks do not want to be in the property management business. They want those properties off their books and fast.