Foreclosures Over 1,000,000 loans in default? Time 2 Learn How To Buy Preforelosures?

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Foreclosures Over 1,000,000 loans in default? Time 2 Learn How To Buy Preforelosures?

Ken M.
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

I'm not making this up. WSJ is.  

I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

"Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

************************************

"As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

************************************
************************************

Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Quote from @Chris Seveney:
Quote from @Ken M.:

I'm not making this up. WSJ is.  

I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

"Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

************************************

"As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

************************************
************************************

Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Ken M.:

    I'm not making this up. WSJ is.  

    I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

    "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

    The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

    ************************************

    "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

    In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

    The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

    Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

    ************************************
    ************************************

    Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


    We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

    7e investments53 Reviews
    WebsiteView Page
    2Reply
    • Don KonipolBusiness Member
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      1y
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Private Mortgage Financing Partners, LLC
      WebsiteView Page
      6Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Podcast Guest on Show #222
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    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Jay Hinrichs:
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Many of these will go through a forbearance or if they cannot work it out, they will head to foreclosure? I get a lot of pushback on this from people telling me I do not know what I am talking about but lets put a real world common sense (which is not so common) situation:

      You bought a house for $250k, put 10% down and now that house is worth $350k. So your mortgage is around $220k but its worth $350k. You got caught up in credit cards, insurance, escrow etc and were spending too much money thinking money would keep flowing. You also have a rate of 4% mortgage and a payment of $1500 all in.

      You are behind on your mortgage and credit cards, your credit is 580 and your house is a 3 bed 1 bath home for you and your two kids. Now this is not every situation but its pretty common. 

      Do you: 
      1. Sell sub-to let someone else take over, move out and try and find a place to rent with awful credit?
      2. Sell, take the money and get a rental but you cannot afford a new home
      3. Let the lender foreclose, then hope you can find a rental with your awful credit

      4. File bankruptcy which buys you atleast six months, restructures your mortgage and credit card debts into something that you could probably afford?

      5. Lender works out a trial payment plan and loan mod.

      Well you can choose what you think, we have historical data over the past 2-3 years on this and unless the borrower has died, option #3 almost never occurs (1 in 10), option #4 and option #5 take up the other 90% from what we have seen. This is what we do as a buyer of defaulted loans, so these are not made up numbers.

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    • Dan DeppenBusiness Member
      Erie, CO · Member since 2017 · 274 posts · 267 votes
      1y
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Many of these will go through a forbearance or if they cannot work it out, they will head to foreclosure? I get a lot of pushback on this from people telling me I do not know what I am talking about but lets put a real world common sense (which is not so common) situation:

      You bought a house for $250k, put 10% down and now that house is worth $350k. So your mortgage is around $220k but its worth $350k. You got caught up in credit cards, insurance, escrow etc and were spending too much money thinking money would keep flowing. You also have a rate of 4% mortgage and a payment of $1500 all in.

      You are behind on your mortgage and credit cards, your credit is 580 and your house is a 3 bed 1 bath home for you and your two kids. Now this is not every situation but its pretty common. 

      Do you: 
      1. Sell sub-to let someone else take over, move out and try and find a place to rent with awful credit?
      2. Sell, take the money and get a rental but you cannot afford a new home
      3. Let the lender foreclose, then hope you can find a rental with your awful credit

      4. File bankruptcy which buys you atleast six months, restructures your mortgage and credit card debts into something that you could probably afford?

      5. Lender works out a trial payment plan and loan mod.

      Well you can choose what you think, we have historical data over the past 2-3 years on this and unless the borrower has died, option #3 almost never occurs (1 in 10), option #4 and option #5 take up the other 90% from what we have seen. This is what we do as a buyer of defaulted loans, so these are not made up numbers.


       I'm always surprised that borrowers never take option 2, given how much equity some of them have. I've had a couple take option 3, although they usually file BK to buy some time first. The common option I've seen lately is reinstatement, even after not paying for a year +.

      0Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Dan Deppen:
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Many of these will go through a forbearance or if they cannot work it out, they will head to foreclosure? I get a lot of pushback on this from people telling me I do not know what I am talking about but lets put a real world common sense (which is not so common) situation:

      You bought a house for $250k, put 10% down and now that house is worth $350k. So your mortgage is around $220k but its worth $350k. You got caught up in credit cards, insurance, escrow etc and were spending too much money thinking money would keep flowing. You also have a rate of 4% mortgage and a payment of $1500 all in.

      You are behind on your mortgage and credit cards, your credit is 580 and your house is a 3 bed 1 bath home for you and your two kids. Now this is not every situation but its pretty common. 

      Do you: 
      1. Sell sub-to let someone else take over, move out and try and find a place to rent with awful credit?
      2. Sell, take the money and get a rental but you cannot afford a new home
      3. Let the lender foreclose, then hope you can find a rental with your awful credit

      4. File bankruptcy which buys you atleast six months, restructures your mortgage and credit card debts into something that you could probably afford?

      5. Lender works out a trial payment plan and loan mod.

      Well you can choose what you think, we have historical data over the past 2-3 years on this and unless the borrower has died, option #3 almost never occurs (1 in 10), option #4 and option #5 take up the other 90% from what we have seen. This is what we do as a buyer of defaulted loans, so these are not made up numbers.


       I'm always surprised that borrowers never take option 2, given how much equity some of them have. I've had a couple take option 3, although they usually file BK to buy some time first. The common option I've seen lately is reinstatement, even after not paying for a year +.


      in my experience with pre foreclosure rescue work when it was legal in OR and WA. Folks were in deep denial waiting for some rescue to come .  
      Podcast Guest on Show #222
      JLH Capital Partners51 Review
      WebsiteView Page
      0Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Jay Hinrichs:
      Quote from @Dan Deppen:
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Many of these will go through a forbearance or if they cannot work it out, they will head to foreclosure? I get a lot of pushback on this from people telling me I do not know what I am talking about but lets put a real world common sense (which is not so common) situation:

      You bought a house for $250k, put 10% down and now that house is worth $350k. So your mortgage is around $220k but its worth $350k. You got caught up in credit cards, insurance, escrow etc and were spending too much money thinking money would keep flowing. You also have a rate of 4% mortgage and a payment of $1500 all in.

      You are behind on your mortgage and credit cards, your credit is 580 and your house is a 3 bed 1 bath home for you and your two kids. Now this is not every situation but its pretty common. 

      Do you: 
      1. Sell sub-to let someone else take over, move out and try and find a place to rent with awful credit?
      2. Sell, take the money and get a rental but you cannot afford a new home
      3. Let the lender foreclose, then hope you can find a rental with your awful credit

      4. File bankruptcy which buys you atleast six months, restructures your mortgage and credit card debts into something that you could probably afford?

      5. Lender works out a trial payment plan and loan mod.

      Well you can choose what you think, we have historical data over the past 2-3 years on this and unless the borrower has died, option #3 almost never occurs (1 in 10), option #4 and option #5 take up the other 90% from what we have seen. This is what we do as a buyer of defaulted loans, so these are not made up numbers.


       I'm always surprised that borrowers never take option 2, given how much equity some of them have. I've had a couple take option 3, although they usually file BK to buy some time first. The common option I've seen lately is reinstatement, even after not paying for a year +.


      in my experience with pre foreclosure rescue work when it was legal in OR and WA. Folks were in deep denial waiting for some rescue to come .  

       Yep many are in deep denial and just do not want to admit it. Had someone reach out today that has $250k in loans and is 12 months past due, home is not worth $250k and getting foreclosed on. Lender offered them deed in lieu and they refuse, instead they raised the price of the home to cover costs even though it has not sold at its $20k lower price.

      7e investments53 Reviews
      WebsiteView Page
      1Reply
    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Dan Deppen:
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Many of these will go through a forbearance or if they cannot work it out, they will head to foreclosure? I get a lot of pushback on this from people telling me I do not know what I am talking about but lets put a real world common sense (which is not so common) situation:

      You bought a house for $250k, put 10% down and now that house is worth $350k. So your mortgage is around $220k but its worth $350k. You got caught up in credit cards, insurance, escrow etc and were spending too much money thinking money would keep flowing. You also have a rate of 4% mortgage and a payment of $1500 all in.

      You are behind on your mortgage and credit cards, your credit is 580 and your house is a 3 bed 1 bath home for you and your two kids. Now this is not every situation but its pretty common. 

      Do you: 
      1. Sell sub-to let someone else take over, move out and try and find a place to rent with awful credit?
      2. Sell, take the money and get a rental but you cannot afford a new home
      3. Let the lender foreclose, then hope you can find a rental with your awful credit

      4. File bankruptcy which buys you atleast six months, restructures your mortgage and credit card debts into something that you could probably afford?

      5. Lender works out a trial payment plan and loan mod.

      Well you can choose what you think, we have historical data over the past 2-3 years on this and unless the borrower has died, option #3 almost never occurs (1 in 10), option #4 and option #5 take up the other 90% from what we have seen. This is what we do as a buyer of defaulted loans, so these are not made up numbers.


       I'm always surprised that borrowers never take option 2, given how much equity some of them have. I've had a couple take option 3, although they usually file BK to buy some time first. The common option I've seen lately is reinstatement, even after not paying for a year +.


      in my experience with pre foreclosure rescue work when it was legal in OR and WA. Folks were in deep denial waiting for some rescue to come .  

       Yep many are in deep denial and just do not want to admit it. Had someone reach out today that has $250k in loans and is 12 months past due, home is not worth $250k and getting foreclosed on. Lender offered them deed in lieu and they refuse, instead they raised the price of the home to cover costs even though it has not sold at its $20k lower price.

      What I was taught as a child is that de nile is a river in Egypt. Nothing good happens unless you take appropriate action.
      0Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Ken M.:
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Dan Deppen:
      Quote from @Chris Seveney:
      Quote from @Jay Hinrichs:
      Quote from @Don Konipol:
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.

      In both residential and most commercial markets there are THREE prices; the wholesalers (flippers) price, the investors price and the users price. Most people don’t think of commercial property as having a “users” price, but I will provide an example below.

      some number of years ago I was forced  to foreclose on an older office building that had been converted to a combo office / living units.  This type of property had no obvious buyer, but to generate interest I listed on Loopnet with the proposal of 20% down with owner financing of the balance.  

      As expected, I received very lowball offers from numerous wholesalers, all offering low prices, wide “weasel” clauses, no REAL earnest money (“ my attorney will hold my personal check”, etc.) and 120 -180 days closes.  In addition I received two  low, but reasonable offers from investors, who had plans to rent out the facility.  While considering which of these two offers I would pursue, I received a call from a broker saying he had a church client that would like to make an offer and would use the facilities for offices associated with its non profit divisions and the bedrooms for spousal abuse victims shelter.  We negotiated a deal that allowed the church a low enough down payment to keep enough funds in reserve to make needed improvements/repairs.  To satisfy my collateral requirements the church put up as additional collateral a lot they owned in the same general area.  The price paid was about 30% higher than the investors had offered. 

      The church refinanced the subject property and paid the note off in just over three years.  As part of the payoff, I accepted the title to the empty lot that was additional collateral for the loan, and leased it back to the church for parking at a 12% 3N annual return.  This went on an additional 4 years before the church exercised its option to purchase the lot back from me for 40% above what I paid.  

      For sellers you will almost always receive a higher price from a user than from an investor, and from an investor than from a wholesaler.  

      People who sell their houses to the ibuyers, usually at 20% below market because they’re attracted to the fast close, no hassle, no Realtor aspect remind me of the people who trade their car in at a 40% “hit” when the initial tires wear out at 30,000 miles, or the people who pay 19.8% interest in their credit card rather than get a 8% consumer loan because they’re attracted want to avoid the hassle.  Then they want to get into real estate but have no capital to invest. 

      Don as it relates to SFR mortgages I think someone like Chris is going to get more bites at the apple.. those chasing NOD's I think will find that many of the folks will not transact as they will be able to do workouts with the lender.. so even though you may have 1 mil NODS being filed I suspect maybe 10% to 20% of those will filter down to the one off investor thinking they are going to score a sub to deal.. and probably much less than the numbers I stated.

      There will always be defaults as we know.. But it is a different ball game compared to GFC and pre GFC when lenders and service rs did not offer workouts like they do now.. Or by law a borrower is entitled to sit down with a decision maker of thier bank or Service r before the foreclosure can go forward.. Of course many just duck and dont take advantage of it etc etc.

      @Chris Seveney  Chris would know better than me about how to deal with owner occ in the upfront stage.. and the right to have a meeting.. And maybe that law changed since it was enacted in 2011 or so.. or Maybe it was just an Oregon law.. ??

      Many of these will go through a forbearance or if they cannot work it out, they will head to foreclosure? I get a lot of pushback on this from people telling me I do not know what I am talking about but lets put a real world common sense (which is not so common) situation:

      You bought a house for $250k, put 10% down and now that house is worth $350k. So your mortgage is around $220k but its worth $350k. You got caught up in credit cards, insurance, escrow etc and were spending too much money thinking money would keep flowing. You also have a rate of 4% mortgage and a payment of $1500 all in.

      You are behind on your mortgage and credit cards, your credit is 580 and your house is a 3 bed 1 bath home for you and your two kids. Now this is not every situation but its pretty common. 

      Do you: 
      1. Sell sub-to let someone else take over, move out and try and find a place to rent with awful credit?
      2. Sell, take the money and get a rental but you cannot afford a new home
      3. Let the lender foreclose, then hope you can find a rental with your awful credit

      4. File bankruptcy which buys you atleast six months, restructures your mortgage and credit card debts into something that you could probably afford?

      5. Lender works out a trial payment plan and loan mod.

      Well you can choose what you think, we have historical data over the past 2-3 years on this and unless the borrower has died, option #3 almost never occurs (1 in 10), option #4 and option #5 take up the other 90% from what we have seen. This is what we do as a buyer of defaulted loans, so these are not made up numbers.


       I'm always surprised that borrowers never take option 2, given how much equity some of them have. I've had a couple take option 3, although they usually file BK to buy some time first. The common option I've seen lately is reinstatement, even after not paying for a year +.


      in my experience with pre foreclosure rescue work when it was legal in OR and WA. Folks were in deep denial waiting for some rescue to come .  

       Yep many are in deep denial and just do not want to admit it. Had someone reach out today that has $250k in loans and is 12 months past due, home is not worth $250k and getting foreclosed on. Lender offered them deed in lieu and they refuse, instead they raised the price of the home to cover costs even though it has not sold at its $20k lower price.

      What I was taught as a child is that de nile is a river in Egypt. Nothing good happens unless you take appropriate action.

       We had three people today we spoke with in similar situations - one raised the price of their home by 10% when its been on market for 3 months because they think someone will pay it so they can pay their loan off. They refuse to shortsale it even though its 30% overpriced.

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    • Minna Reid
      Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
      1y

      I've been watching this happen for the last 5 years - most of the problems are with FHA. Homeowners - current or not - have been aggressively pushed into forbearances and loan mods for years now. Many homeowners haven't paid at all in years. The "workouts" have been financed by worthless HUD partial claims - silent seconds. HUD has written millions since covid. The problem is they are all written on negative equity as these borrowers started with limited equity, and lost it all and then some, with so called "homeowner help programs" packed with principal deferments, back due payments, fees and interest.

      They've been pushing back the inevitable fallout of this situation throughout the Biden years. Now the bills are due and the market is in decline. Its gonna be messy. Over the last few months I've picked up about 10 new short sales - 95% FHA with partial claims written though the last few years. And this is just the beginning. It's time to pay the piper.

      3Reply
    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Minna Reid:

      I've been watching this happen for the last 5 years - most of the problems are with FHA. Homeowners - current or not - have been aggressively pushed into forbearances and loan mods for years now. Many homeowners haven't paid at all in years. The "workouts" have been financed by worthless HUD partial claims - silent seconds. HUD has written millions since covid. The problem is they are all written on negative equity as these borrowers started with limited equity, and lost it all and then some, with so called "homeowner help programs" packed with principal deferments, back due payments, fees and interest.

      They've been pushing back the inevitable fallout of this situation throughout the Biden years. Now the bills are due and the market is in decline. Its gonna be messy. Over the last few months I've picked up about 10 new short sales - 95% FHA with partial claims written though the last few years. And this is just the beginning. It's time to pay the piper.

      .
      Good synopsis!
      1Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Minna Reid:

      I've been watching this happen for the last 5 years - most of the problems are with FHA. Homeowners - current or not - have been aggressively pushed into forbearances and loan mods for years now. Many homeowners haven't paid at all in years. The "workouts" have been financed by worthless HUD partial claims - silent seconds. HUD has written millions since covid. The problem is they are all written on negative equity as these borrowers started with limited equity, and lost it all and then some, with so called "homeowner help programs" packed with principal deferments, back due payments, fees and interest.

      They've been pushing back the inevitable fallout of this situation throughout the Biden years. Now the bills are due and the market is in decline. Its gonna be messy. Over the last few months I've picked up about 10 new short sales - 95% FHA with partial claims written though the last few years. And this is just the beginning. It's time to pay the piper.


      Hopefully shortsale process is not as painful as it was back in the GFC  .. it was horrid then.. 
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    • Minna Reid
      Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
      1y
      Quote from @Jay Hinrichs:
      Quote from @Minna Reid:

      I've been watching this happen for the last 5 years - most of the problems are with FHA. Homeowners - current or not - have been aggressively pushed into forbearances and loan mods for years now. Many homeowners haven't paid at all in years. The "workouts" have been financed by worthless HUD partial claims - silent seconds. HUD has written millions since covid. The problem is they

      are all written on negative equity as these borrowers started with limited equity, and lost it all and then some, with so called "homeowner help programs" packed with principal deferments, back due payments, fees and interest.

      They've been pushing back the inevitable fallout of this situation throughout the Biden years. Now the bills are due and the market is in decline. Its gonna be messy. Over the last few months I've picked up about 10 new short sales - 95% FHA with partial claims written though the last few years. And this is just the beginning. Hopefully shortsale process is not as painful as it was back in the GFC .. it was horrid then..

      They are actually easier than ever right now. These lenders know what's going on. They took the government handouts to keep the people in the homes, knowing full well what it would lead to. They've been beefing up loss mit for years and (at least currently) have a bunch of easy streamline liquidation options.

      2Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Minna Reid:
      Quote from @Jay Hinrichs:
      Quote from @Minna Reid:

      I've been watching this happen for the last 5 years - most of the problems are with FHA. Homeowners - current or not - have been aggressively pushed into forbearances and loan mods for years now. Many homeowners haven't paid at all in years. The "workouts" have been financed by worthless HUD partial claims - silent seconds. HUD has written millions since covid. The problem is they

      are all written on negative equity as these borrowers started with limited equity, and lost it all and then some, with so called "homeowner help programs" packed with principal deferments, back due payments, fees and interest.

      They've been pushing back the inevitable fallout of this situation throughout the Biden years. Now the bills are due and the market is in decline. Its gonna be messy. Over the last few months I've picked up about 10 new short sales - 95% FHA with partial claims written though the last few years. And this is just the beginning. Hopefully shortsale process is not as painful as it was back in the GFC .. it was horrid then..

      They are actually easier than ever right now. These lenders know what's going on. They took the government handouts to keep the people in the homes, knowing full well what it would lead to. They've been beefing up loss mit for years and (at least currently) have a bunch of easy streamline liquidation options.


      ya as I think back to 08 or so..  Wells fargo here oregon had like 25 folks in loss mit for the entire state.. by 2011 they had 450  I had a  client that worked there.. So it was just wild trying to do short sales and taking 6 to 9 months to even get a response to your offer contract. 

      And of course the sellers have to cooperate which can be a challenge in its own rigiht. 
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    • NA Dale Bose
      Investor · Minneapolis · Member since 2024 · 2 posts · 0 votes
      1y
      Quote from @Chris Seveney:
      Quote from @Ken M.:

      I'm not making this up. WSJ is.  

      I started out buying pre-foreclosures and have made a lot of money buying them. But, now it requires training to stay out of trouble.

      "Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.

      The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise."

      ************************************

      "As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little as 3.5% down. No skin off lenders' backs if borrowers later defaulted, since the mortgages were backed by the government.

      In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

      The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

      Institute's Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise"

      ************************************
      ************************************

      Oh, did anybody mention we are experiencing inflation? These people are going to start getting foreclosure notices.


      We just acquired $5M of defaulted loans that will be REO's. I always tell investors they should bea note investors best friend for off market deals - of course the ones that do reach out to us are wholesalers trying to lowball the hell out of the deal thinking we are idiots but we are typically very sophisticated and no the numbers very well including the ARV, what it will take to get it repaired as well as rental rates.


       Spot on Chris.  At the minimum, I suggest to real estate investor that they know a debt investor that's buying non-performing loans from lenders.  We can be a great resource for them and they can get in before the crowds that scan the pre-foreclosure lists. 

      0Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    Yes, there are approx that loans that should be in foreclosure, but theyre not, and in my opinion, are unlikely to be. If you look into the data, you'll see that something like 500k of these are 90+ delinquent, but the average days delinquent is over 500. These loans have been sitting in limbo for years, and my guess is that it's unlikely they ever make it to foreclosure. There are so many programs for homeowners to mod, access forbearance, etc, to keep them in the homes that I doubt these are resolved anytime soon. 

    On the other hand, I think investment loans are something to watch for forced selling. A lot of DSCR loans being made right now are on the fringe of solvency, and I expect more pressure in this market segment as operating costs continue to rise and rents continue to stagnate over the next couple years.

    2Reply
    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Patrick Roberts:

      Yes, there are approx that loans that should be in foreclosure, but theyre not, and in my opinion, are unlikely to be. If you look into the data, you'll see that something like 500k of these are 90+ delinquent, but the average days delinquent is over 500. These loans have been sitting in limbo for years, and my guess is that it's unlikely they ever make it to foreclosure. There are so many programs for homeowners to mod, access forbearance, etc, to keep them in the homes that I doubt these are resolved anytime soon. 

      On the other hand, I think investment loans are something to watch for forced selling. A lot of DSCR loans being made right now are on the fringe of solvency, and I expect more pressure in this market segment as operating costs continue to rise and rents continue to stagnate over the next couple years.

      Your comment: "These loans have been sitting in limbo for years"

      Yes, those were the Biden years. They didn't want the embarrassment of it being known.

      "Under the guise of Covid relief, the Biden administration masked the growing troubles in the housing market by paying off borrowers and mortgage servicers to prevent foreclosures. Of the 52,531 FHA loans last year that went seriously delinquent within their first year, only nine resulted in foreclosure."

      That bill is now coming due.

      We have now entered the DOGE years to clean up the mess. Expect changes and you will be rewarded.


      2Reply
    • Eric James
      Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
      1y
      Quote from @Patrick Roberts:

      Yes, there are approx that loans that should be in foreclosure, but theyre not, and in my opinion, are unlikely to be. If you look into the data, you'll see that something like 500k of these are 90+ delinquent, but the average days delinquent is over 500. These loans have been sitting in limbo for years, and my guess is that it's unlikely they ever make it to foreclosure. There are so many programs for homeowners to mod, access forbearance, etc, to keep them in the homes that I doubt these are resolved anytime soon. 

      On the other hand, I think investment loans are something to watch for forced selling. A lot of DSCR loans being made right now are on the fringe of solvency, and I expect more pressure in this market segment as operating costs continue to rise and rents continue to stagnate over the next couple years.


      The FHA loans aren't in default because they're doing approaching 30,000 "COVID relief" workouts per month for delinquent borrowers. That program was recently extended until next spring.

      2Reply
    • Minna Reid
      Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
      1y

      Wow - another extension - you're right I just looked it up. Til Feb 2026 now. Just how long can they keep the free money handout going per "Covid relief"... the cold that keeps giving lololololol.

      I actually have a client who's been wanting to list for almost two years now....but every time shes ready, they continue to extend these ridiculous programs. I guess she just got herself another year of the free ride. 

      2Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    1y

    @Jay Hinrichs "But it is a different ball game compared to GFC and pre GFC when lenders and servicers did not offer workouts like they do now." 

    The question is how long does this hold out for owners getting into payment trouble? If we have a shift in the job market/unemployment maybe that stops the party. We're looking at distressed properties and constantly getting confused at the sold prices. Either my numbers are bad or buyers don't care about numbers. 

    0Reply
    • Minna Reid
      Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
      1y
      Quote from @Jaron Walling:

      @Jay Hinrichs "But it is a different ball game compared to GFC and pre GFC when lenders and servicers did not offer workouts like they do now." 

      The question is how long does this hold out for owners getting into payment trouble? If we have a shift in the job market/unemployment maybe that stops the party. 

      Endless, limitless, no documents required workout options have already been happening for 4-5 years. They've been created out of money that does not exist and won't - not without continuous aggressive home value appreciation and/or pledging of endless future taxpayer funds. 

      Loan workouts have always existed - but have been mostly based on realistic outcomes - until the Biden years. 

      It looks like we may be returning to  a more reasonable time now, which means less workouts, not more.

      1Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    1y

    @Minna Reid "continuous aggressive home value appreciation" - That's dangerous investing and a big reason we haven't bought anything this year. We keep looking though. 

    0Reply
  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 644 votes
    1y

    PSA to any investors pursuing homes in default, especially where the owners still have equity: be aware of special rules within your state regarding contracts when the homeowner is in default.  These rules may not apply if you're buying as an owner occupant, but there may be additional protections for distressed property owners when an investor is buying the home.  Be sure you are using the correct contract for this scenario.  

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    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Stephanie Medellin:

      PSA to any investors pursuing homes in default, especially where the owners still have equity: be aware of special rules within your state regarding contracts when the homeowner is in default.  These rules may not apply if you're buying as an owner occupant, but there may be additional protections for distressed property owners when an investor is buying the home.  Be sure you are using the correct contract for this scenario.  

      .
      You raise a very valid point: Investors Beware

      Investors Sued For Working With Foreclosures and for Doing SubTo And Doing Some Pretty Deceptive Things -  

      Will Lose ALL Properties If Found Guilty, Face Fines and Jail Time And Will Be Prevented From Dealing With Real Estate Again - 

      All Parties Are Presumed Innocent Until Proven Guilty In A Court of Law (Lawsuit alone is going to cost each of them $25,000 in legal fees and a year and a half in court) And NO, Your Guru won't be paying your legal fees, but he will be right there with you, answering the Judge to protect himself.

      Click to expand - Read The Full Thing, ( warning it gets pretty nasty)

      Here ya go - release was March 14, 2025

      https://www.azag.gov/press-release/attorney-general-mayes-su... Release

      https://www.azag.gov/sites/default/files/2025-03/CV2025-0084... Lawsuit (Click to read full lawsuit)

      They give the identities of two partners and call the third - Partner "C" plus dozens of "not yet named"

      2Reply
    • James Hamling
      Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
      1y
      Quote from @Ken M.:
      Quote from @Stephanie Medellin:

      PSA to any investors pursuing homes in default, especially where the owners still have equity: be aware of special rules within your state regarding contracts when the homeowner is in default.  These rules may not apply if you're buying as an owner occupant, but there may be additional protections for distressed property owners when an investor is buying the home.  Be sure you are using the correct contract for this scenario.  

      .
      You raise a very valid point: Investors Beware

      Investors Sued For Working With Foreclosures and for Doing SubTo And Doing Some Pretty Deceptive Things -  

      Will Lose ALL Properties If Found Guilty, Face Fines and Jail Time And Will Be Prevented From Dealing With Real Estate Again - 

      All Parties Are Presumed Innocent Until Proven Guilty In A Court of Law (Lawsuit alone is going to cost each of them $25,000 in legal fees and a year and a half in court) And NO, Your Guru won't be paying your legal fees, but he will be right there with you, answering the Judge to protect himself.

      Click to expand - Read The Full Thing, ( warning it gets pretty nasty)

      Here ya go - release was March 14, 2025

      https://www.azag.gov/press-release/attorney-general-mayes-su... Release

      https://www.azag.gov/sites/default/files/2025-03/CV2025-0084... Lawsuit (Click to read full lawsuit)

      They give the identities of two partners and call the third - Partner "C" plus dozens of "not yet named"


       What are the odd's that once they get into those title co's and law firms they keep pulling at the threads to uncover other similar operations and it just keeps going n going n going n going.........

      1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    1y

    @Ken M. the info I can find seems to reiterate what @Chris Seveney is saying, and seems common sense to me, that default - foreclosure is far from a 1:1 ratio. 

    For argument sake, let's say the ratio of default - foreclosure is double heck even triple the ratio Chris mentions, let's call it 30%. 

    That's 300k properties making there way through from this million home headline. 

    Next question people should have is what's the absorption rate? 

    What's absorption rate James? 

    Well, simply put it's the ready demand to snatch-up those properties that could come to market. 

    Now, again I'd hope the ever so illusive "common sense" would come to play. But in case if you hadn't noticed, there is a whole heck of a lot of demand. In other words, the sponge is so dang dry and THIRSTY for more properties. 

    Here in MN Twin Cities for SFH's we see inventory pacing just under 1 month, around 0.7 as of this writing for range of median market home.

    To put this in context it's currently the 4th lowest inventory level I have ever seen IN MY LIFE for this market. Only '21', '22', and '23' ever so barely beat it with #1,2 and 3 spots. It is considered a "Sellers Market" at or below 3.0 mnths supply. 

    So from where I sit, I say please PLEASE bring us another ~2k homes per month! The market needs em. And even then, that # only get's us back to 2020 inventory levels when we saw as high as 2 months supply of inventory. 

    In case math isnt a friend, 300k foreclosed homes is 25k per month, spread across the entire USA. 

    In USA there is, averaged out, about 358k SFH's sold every month. 25k foreclosures is a drop in the bucket.

    This isn't '08'/'09' where absorption rate effectively went to near 0 overnight. 

    It's a good headline though, I bet it get's a whole bunch of traffic, views, clicks and sells a boat load of advertising. 

    And there in lies the rub, it's just a headline designed to sell advertising. Not to inform and educate people. Journalism is all but dead. Long live the click-bait..... 

    3Reply
    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @James Hamling:

      @Ken M. the info I can find seems to reiterate what @Chris Seveney is saying, and seems common sense to me, that default - foreclosure is far from a 1:1 ratio. 

      For argument sake, let's say the ratio of default - foreclosure is double heck even triple the ratio Chris mentions, let's call it 30%. 

      That's 300k properties making there way through from this million home headline. 

      Next question people should have is what's the absorption rate? 

      What's absorption rate James? 

      Well, simply put it's the ready demand to snatch-up those properties that could come to market. 

      Now, again I'd hope the ever so illusive "common sense" would come to play. But in case if you hadn't noticed, there is a whole heck of a lot of demand. In other words, the sponge is so dang dry and THIRSTY for more properties. 

      Here in MN Twin Cities for SFH's we see inventory pacing just under 1 month, around 0.7 as of this writing for range of median market home.

      To put this in context it's currently the 4th lowest inventory level I have ever seen IN MY LIFE for this market. Only '21', '22', and '23' ever so barely beat it with #1,2 and 3 spots. It is considered a "Sellers Market" at or below 3.0 mnths supply. 

      So from where I sit, I say please PLEASE bring us another ~2k homes per month! The market needs em. And even then, that # only get's us back to 2020 inventory levels when we saw as high as 2 months supply of inventory. 

      In case math isnt a friend, 300k foreclosed homes is 25k per month, spread across the entire USA. 

      In USA there is, averaged out, about 358k SFH's sold every month. 25k foreclosures is a drop in the bucket.

      This isn't '08'/'09' where absorption rate effectively went to near 0 overnight. 

      It's a good headline though, I bet it get's a whole bunch of traffic, views, clicks and sells a boat load of advertising. 

      And there in lies the rub, it's just a headline designed to sell advertising. Not to inform and educate people. Journalism is all but dead. Long live the click-bait..... 

      .

      as @Minna Reid said 

      "Wow - another extension - you're right I just looked it up. Til Feb 2026 now"

      Wha . . . .??

      Oh well, there goes the can down the road with a big "kick"


      1Reply
    • James Hamling
      Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
      1y
      Quote from @Ken M.:
      Quote from @James Hamling:

      @Ken M. the info I can find seems to reiterate what @Chris Seveney is saying, and seems common sense to me, that default - foreclosure is far from a 1:1 ratio. 

      For argument sake, let's say the ratio of default - foreclosure is double heck even triple the ratio Chris mentions, let's call it 30%. 

      That's 300k properties making there way through from this million home headline. 

      Next question people should have is what's the absorption rate? 

      What's absorption rate James? 

      Well, simply put it's the ready demand to snatch-up those properties that could come to market. 

      Now, again I'd hope the ever so illusive "common sense" would come to play. But in case if you hadn't noticed, there is a whole heck of a lot of demand. In other words, the sponge is so dang dry and THIRSTY for more properties. 

      Here in MN Twin Cities for SFH's we see inventory pacing just under 1 month, around 0.7 as of this writing for range of median market home.

      To put this in context it's currently the 4th lowest inventory level I have ever seen IN MY LIFE for this market. Only '21', '22', and '23' ever so barely beat it with #1,2 and 3 spots. It is considered a "Sellers Market" at or below 3.0 mnths supply. 

      So from where I sit, I say please PLEASE bring us another ~2k homes per month! The market needs em. And even then, that # only get's us back to 2020 inventory levels when we saw as high as 2 months supply of inventory. 

      In case math isnt a friend, 300k foreclosed homes is 25k per month, spread across the entire USA. 

      In USA there is, averaged out, about 358k SFH's sold every month. 25k foreclosures is a drop in the bucket.

      This isn't '08'/'09' where absorption rate effectively went to near 0 overnight. 

      It's a good headline though, I bet it get's a whole bunch of traffic, views, clicks and sells a boat load of advertising. 

      And there in lies the rub, it's just a headline designed to sell advertising. Not to inform and educate people. Journalism is all but dead. Long live the click-bait..... 

      .

      as @Minna Reid said 

      "Wow - another extension - you're right I just looked it up. Til Feb 2026 now"

      Wha . . . .??

      Oh well, there goes the can down the road with a big "kick"
       


      One of my proudest moments when flipping was when I got approved from Wells Fargo to buy direct REO, in volume. Getting "tapes" directly.

      Shortly after BOA followed. 

      It was at that moment, as i was paroozing through the lists like a kid in a candy shop that it dawned on me just what a colossal mess they must be in because I, this punk from MN got in on what I really didn't think I should have. 

      And they were. I knew an asset manager at W.F. which detailed the colossal fubar it all was. 

      But that chaotic mess was so bad, well the squeeky wheel get's the grease, and boy oh boy did they lube the heck out of it. 

      Today it's such a different world. They could handle '08' volume again without breaking a sweat. Ok, maybe a bead or two of sweat but point is, that opportunity we once had was from the collapse meet's total non-existence of a system to handle it. That's done n gone, we will never see the likes ever again, NEVER. 

      They got systems and process's in place easily a thousand fold what '09' was. 

      Kick the can, don't kick the can, it doesn't matter. Systems exist to readily handle '08' 2.0.. 

      To get to anything similar to what we enjoyed in '09'-'12' it's gotta be on level of depression. And if that happens, were gonna be too busy fighting a hobo for a chicken leg to worry about buying any properties. 

      2Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1y

    @James Hamling solid math. Milwaukee is happy to take another 2,000 homes. That's like spitting in a camp fire..

    1Reply
  • Gregory Chadwell
    Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes
    1y

    Check this out!  

    0Reply
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