Causes and Consequences of the foreclosure Crisis.
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Transcript of Causes and Consequences of the foreclosure Crisis.
Causes and Consequences of the Foreclosure Crisis
A look at the effects of the 2007 collapse of the banking and housing industries.
Housing or Real Estate Bubble – Definition
•Real property which rapidly increases to the point that unsustainable debt levels are reached relative to expendable income as well as other affordability indicators within the economy
• Housing bubbles are created when fast paced growth in the housing market goes unchecked and spirals out of control
• Factors include lenient and predatory
lending, extremely low adjustable interest rates and a blinding speculative fever
• Housing bubbles are generally
undetectable until after the burst
Housing Bubbles – How They Form
Reasons For The 2007 Burst and Recession
• Adjustable interest rates reset to higher levels
• In 2007, 1.3 million subprime borrowers defaulted on mortgages and were submitted through the foreclosure process
The Domino Effect
• High adjustable interest rates
• Millions of foreclosed homes
• Decline in home demand and home value
• Housing industry jobs were lost
• Jobs connected to housing industry jobs
were lost, etc
The Domino Effect
• Prime mortgage holders defaulted
• Banks accumulated more foreclosures than they could move, compounding the mortgage crisis
• Shareholders and investors panicked
• Lending was basically brought to a standstill, etc
• The Housing and Economic Recovery Act of 2008
Government Response
Government Response
• The Homeowners Affordability and Stability Plan
Foreclosure Help
• Talk directly with the lending institution
• Talk to a HUD approved foreclosure avoidance counselor
Foreclosure Help
Foreclosure Help
• Seek out state and local foreclosure assistance resources
Foreclosure Help
• Contact HOPE NOW which is an alliance of HUD affiliated Intermediaries
Foreclosure Help
• Contact The Homeownership Preservation Foundation which is also affiliated with HUD and provides foreclosure counseling and help
Foreclosures As An Investment
• Low-cost real estate foreclosures abound
• Millions of foreclosed properties sit with a flooded banking industry
Foreclosures As An Investment
• Every day, tens of thousands of homes are being repossessed
• Foreclosure properties are being sold for 50% or less of their actual value
• Short Sales
• Negotiate with banks on behalf of distressed homeowners
Foreclosure Investment Opportunities
Foreclosure Investment Opportunities
• Public Auctions
• Bid against other competitors for foreclosed properties
• Foreclosure Listing Services
• Normally found online
• Get the jump on other investors
Foreclosure Investment Opportunities
• Browse listings, photos and info
• Resources so you can invest with confidence
Foreclosure Investment Opportunities
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