Foreclosures on the rise ... Could it be a good thing?Ari MillerForeclosure prevention
Is it possible to read any of the mortgage trade magazines
without reading about how foreclosures are on the rise and the
sub-prime market's tanking on every other page? We know that things
are rough right now, and they're probably going to get rougher. As
the old saying goes though, every cloud has a silver lining. So
what's going to happen in the next couple of years? It seems pretty
obvious to me that a few more of the big sub-prime lenders are
going to tank and the ones that stay are going to tighten up on a
lot of the programs that were the typical mortgage broker's bread
and butter. A lot of the smaller lenders and even a lot of brokers
are also going to fall by the wayside. At this point, I don't think
it matters or that it's the time to figure out whose fault it was.
Was it the homeowners, the loan officers or the lenders? I've found
that most times in life, it's usually a combination of everyone.
Now is the time to start thinking of some alternative ways to
originate loans.
Pretty soon, the real estate market is going to see a big influx
of foreclosed properties. I'm guessing that it will be mostly
single-family homes, but there will also be a fair share of
multi-family, commercial and mixed-use properties. I'm guessing
that a lot of these properties will be in below-average condition,
but the good news is that they will probably be selling for nice
discounts to market price. Who's going to buy these properties? How
can you originate the mortgages? There will be some homeowners, but
I think there is going to be a lot of real estate investors buying
these properties for not a lot of money. It's not going to be easy
to get them mortgages, but there are some options.
Here are a few the obstacles that you're going to face:
• These properties may be in below-average condition or
have deferred maintenance;
• The utilities may not be on;
• The investors may not have enough money for the down
payment;
• The investor may not have great tax returns; and
• The investors might not have perfect credit.
Combine all of this with the fact that most of the creative
sub-prime programs that used to be here are long gone. But fear
not—there are portfolio lenders and small banks that
specialize in this type of lending.
Here's what you need to do:
1. Find a lender that specializes in loan programs for real
estate investors.
2. Find some real estate agents who specialize in real-estate-owned
properties.
3. Talk to any real estate investor that you know and qualify him
for the mortgage.
4. Close some loans and make money.
It's that simple. My parents always taught me that I had to make
lemons into lemonade. This is a plan that allows you to sell the
cups of lemonade for a couple grand apiece.
Ari Miller is vice president of Gelt Financial Corporation,
a private portfolio lender based in Southampton, Pa. He may be
reached at (215) 357-4955, ext. 275 or e-mail
[email protected].
