"Prospering in the Housing Bust " (or How to take other people's houses)

[TexasLawyer]

Foreclosure Hotspots
Stephane Fitch, 05.30.06, 12:30 AM ET


Turns out, plenty of homeowners are suffering despite the recent boom in house prices. According to Foreclosure.com, a Boca Raton, Fla.-based data service that tracks delinquent mortgage holders, at the end of April there were 87,582 American homes in some phase of foreclosure. Though nationally the number is up just 2.6% from six months ago, in a few cities, foreclosure filings have jumped up by 26% and more.

If you’re flush and hoping to get in early on what may be a bear market in real estate, there may be an opportunity for you in all this. (Read Forbes' recent guide on getting into foreclosures and other smart moves for a falling market, " Prospering in the Housing Bust").

<snip>

Geisen, himself a long-time investor in distressed homes, has a few tips for beginners thinking of making unsolicited offers to distressed borrowers. For starters, focus on a neighborhood you know well--maybe the one you live in, so you’ll have a rock-solid sense of local property values. If you’re lucky enough to find a homeowner willing to sell, they’ll want to close fast, and there won’t be enough time to research the neighborhood.

Consider working with a "hard equity lender," who specializes in making loans to vulture buyers. They charge higher interest rates than local banks, but Geisen says the higher cost is usually justified by the guidance and advice they offer. "It’s a second set of eyes on your deal," he says. Your local mortgage broker should be able to refer you to such lenders.

<snip>

http://www.forbes.com/realestate/2006/05/30/high-foreclosure-cities_cz_sf_0531home.html

[rumpel]

1. Not the only ones:

http://www.ripoffreport.com/results.asp?q1=ALL&q4=&q6=&q3=&q2=&q7=&searchtype=0&submit2=Search!&q5=Litton+Loan&Search=Search

delve deeper and you'll find every company is involved

[tech3149]

2. Sounds good for income, but I can't play that game

I made the decision years ago that I would not profit from the hardship of others. I could really use the income, but I don't need that kind of Karma.

[Cleita]

4. Me too.

When you look into the stories of those who were foreclosed on, you don't want to do it. Especially when the property was sold to pay back taxes or payments without getting the full market value of the property so that the foreclosed on owners can have at least some of the cash.

There was a sad story of a widow with seven children whose house was sold for $4,000 approx. in back taxes and fines. The house was worth $150,000. It seems it should have been sold for that and the family should have gotten the market value less the $4,000 in taxes and fines.

Instead the woman was thrown in jail and her children taken by child services. When she was released from jail she had no home to go to and no money.

[me b zola]

6. Same here

...and for the same reasons that you have stated.

[Viva_La_Revolution]

7. I get you! I was next to a guy in the bank line a few months ago...

he was talking up the teller "Biz is good! Lots of foreclosures!" Gave her his business card!! Made me absolutely ill :puke:

[enid602]

3. 'vulture buyers'

Cute.

[TexasLawyer]

5. yes, very cute

I felt so repulsed by this article and the cavalier, insensitive way it was written. As the rich get richer, the vulture class will have more and more ability to snap up the homes of the down and out.

Redistribution of wealth-- George Bush style.

[No Exit]

8. I want to live in a neighborhood--not in an "investment opportunity!"

I'm so damned sick of the speculators and "smart investors" all around me. Fuck them. I just want a place to live.

[FreeStateDemocrat]

9. Cold like Lou Dobbs old Moneyline show :"Wall Street cash’s in on AIDS."

[MadHound]

10. We're going to see more and more of this

What is economic disaster for most of us is considered a buying opportunity for the wealthy and well off. The last great "buying opportunity" was the Great Depression, when not only land and buildings were bought up, but everything from precious metals to antiques and artwork was snapped up at fire sale prices.

There was a smaller version of this out in rural America during the seventies and eighties when the majority of small farmers went under. This led directly to the rise of corporate foods and our modern ag industry.

[Javaman]

11. At the height of the depression when farms were being auctioned off...

Many of the neighboring farmers would keep quiet while a single farmer would bid a nickle. The gov't auctioneers, mostly locals, would stop after the first bid.

After which, the "winning bidder" would turn the farm back over to the original owner. This is how it was and how it should be.

The gov't screwed them, so they screwed the gov't back...legally.

These people weren't part of the stock buying on margin mania of the 1920's, they were good honest folks that got the royal treatment by the assholes on wall street fixing prices to make themselves money at the expense of the little guy.

I see this same situation returning in the not to distant future. Considering that corps now can post fictitious numbers regarding their worth without reporting to anyone one.

[TexasLawyer]

12. Another recipe for grabbing a house

Loan people money to meet the rising cost of living. Wait 'til they can't pay it back.

Posted on Sun, May. 21, 2006
Debt? It’s in the basics, not the baubles
By KIRSTIN DOWNEY
The Washington Post

Why are Americans so deeply in debt? It’s not because they are using credit cards to buy plasma TVs and premium coffee drinks at Starbucks. The real culprits, according to a new analysis, are the rising costs of housing, health care and education.

The debt of the typical American family earning about $45,000 a year rose 33.1 percent from 2001 to 2004, after adjusting for inflation, according to a study based on data compiled from the Federal Reserve Board’s most recent Survey of Consumer Finances. The Fed report, released in February, gave raw numbers on debt levels. The new study analyzed the data more closely to determine the sources of debt. It was conducted by the Center for American Progress, a Washington think tank that describes itself as progressive and is run by former Clinton White House chief of staff John Podesta.

Real wages, after adjusting for inflation, have been flat since 2001, according to the study, while the cost of big-ticket items for which families pay the most rose. In the past five years, the costs of medical care, housing, food, cars and household operations rose 11.2 percent, the study said. Many families are trying to make up the difference by borrowing, according to Christian Weller, author of the report and a senior economist at the center.

“Very little can be explained by frivolous consumer spending,” Weller said. His views were echoed in an early May news conference by Elizabeth Warren, a law professor at Harvard University who analyzed the sources of debt that emerge in bankruptcy filings and reviewed the results of Weller’s study. “The average American family is walking a high wire and hoping there won’t be a high wind,” Warren said.

<snip>

http://www.kansascity.com/mld/kansascity/business/personal_finance/14613044.htm

[earth mom]

13. Damn Vultures-Pox on them!

:puke:

And also the ones who put out those "We buy houses" signs. Yeah, they buy houses-for pennies on the dollar. :grr:

[patcox2]

14. Its not necessarily evil, if they have no equity.

The foreclosures generally happen to those with no equity; those with equity can always sell. If someone is unable to make their payments on a $200,000 house with a $250,000 mortgage, and I am able to come in and cram down the first mortgage holder and buy the house for $200,000, I have not hurt that person; they are now out from under, and can start fresh. They were going to be out anyway, and they lost their equity long before I arrived.

[TexasLawyer]

15. I agree-not evil

I guess my biggest problem is with the economic scenario that our glorious leaders have created where families can be readily put into fiscal crisis-- rising interest rates, jobs lost to India and China, no health insurance, inflation, military deployment of the breadwinner, etc...

And the people favored under Bush's tax policies, especially people with a lot of investment income, are flush with hard cash, and get to profit EVEN FURTHER from the downward spiral that has been rigged for the average working person.

The people who would be working with the vulture financiers would be the people who do have some equity in their home and who want to salvage some of it.