As I’m sure you recently heard, Bank of America announced that in 23 states it was halting foreclosures due to documents that were rushed through the system; some wrongful foreclosures were definitely included.
Oops. Way to go BofA.
Well, JP Morgan Chase, GMAC Mortgage, and PNC Financial Services basically followed suit. I can only assume that they smelled their own lawsuits coming their way and were quick to follow the leader (of course these big 4 are in constant communication).
Now Bank of America is stopping the foreclosure process in all 50 states until they can sort out the mess. Yes, you read that correctly. All 50. As of the writing of this article, I’m not sure what the other big boys are going to do, but I have a feeling that there is a good chance that they will follow suit.
So what does this mean for us as investors?
- If you’ve been buying foreclosure deals via the MLS ( bank owned properties listed by REO agents), the supply of these properties will decrease in the short term.
- The demand for well renovated properties will go up (at least in the short term).
- It is time to shift your marketing efforts to other means — letters, postcards, bandits — in order to diversify away from foreclosures (which you should already be doing).
These are only my predictions based on simple economics. Many variables can have an effect on supply and demand. Once you learn the basics of investing and have some deals under your belt, what becomes important is keeping up with your local marketplace.
What do you think will happen due to the current foreclosure situation?
Photo: Adam Pieniazek