Copyright (c) 2009 Frank Patrick
How Reckless Lending Fueled Foreclosures
Everyone knows the economy is bad � and that it all started with the housing crash. Foreclosures continue to fill up the airwaves � but just how bad is it? We often hear conflicting reports � home sales are up, home sales are down � but one man went ahead and examined all the evidence. Real Estate Blogger Ira Artman evened out all the parameters from all the housing reports, and all things being equal, foreclosures are now starting at a rate that�s almost half of existing home sales and almost five times the number of new home sales (check out his math for yourself at
http://mortgagenewsclips.com/2009/04/26/ira-artmans-sterling-slivers-drawn-and-quartered-home-sales-and-foreclosures ).
That means REO (Real Estate Owned) listings will continue to mushroom even beyond the record-setting numbers we�ve seen the last year and a half. Obviously the bad economy and growing unemployment figures account for a lot of people not being able to keep up with payments on their mortgages. But just as obviously, some crazy lending practices are what created this mess in the first place � and continue to haunt the housing market years later.
�The Mercury News� caught a snapshot of a particularly nasty time in California in late 2006. From August to November, three smaller lenders, Ownit, Master Financial and ResMAE broke a lot of normal rules when they handed out mortgage after mortgage to borrowers with multiple risks � such as no-money-down loans worth hundreds of thousands of dollars and no requirement of income verification!
Of those three lenders, two are out of business and the third, ResMAE, is now operating under new ownership. And it�s no wonder. While other larger, more reputable lenders such as Countrywide and Washington Mutual now face default rates of less than 10% from mortgages they backed during that 2006 period, home loans from the other three now have default rates of over 60%. Incredible.
Those kinds of shaky mortgages began the REO boom � and there�s no question REO agents, brokers and vendors of all types will be kept plenty busy in the months to come. In the first quarter of 2009, over 800,000 homes across the country received at least one foreclosure-related notice, up from around 650,000 in the same time period in 2008. Almost 200,000 homes were actually repossessed and officially became REO properties. In Nevada, one of the worst states hit by overbuilding, one of every 27 homes received a foreclosure filing.
What that means is opportunities in REO-related fields are going to be one of the sure things in today�s strained economy. Since foreclosures are now such a large part of the real estate market, proper training for dealing with these unique property transactions is essential to successfully launching a career in this specialized niche.
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Frank Patrick is the founder of ASREOS. ASREOS (the American Society of REO Specialists) is the first professional association for REO Agents created by REO professionals and contains numerous resources and tools to maximize REO opportunities and find REO listings � as well as the ability to interface with other REO Agents across the country in an exclusive forum. Find out more about ASREOS and what it has to offer at
http://www.asreos.com .
