Buy Foreclosures and Make Money???

Nobody is thrilled about all the short sales and deeds in lieu. After all, Lenders do not want to accept less than they are owed and they are concerned that buyers may be getting below-market deals at their expense. Congress, HUD, FNMA, etc. are leaning on lenders have to figure out a way to reduce foreclosures. Public pressure and perceptions are driving the change as well. The lending industry has a major black eye. And, of course, the Borrowers do not want to lose that all-important credit rating, not to mention loss of their home. The international market is pulling out from buying pools of mortgages, seeing them as an untrustworthy investment. But, right now short sales, foreclosures and deeds in lieu are a fact of life.

Lenders are speculating that they may be buried by borrowers who could pay but don’t want to pay. They are requiring borrowers to demonstrate a financial hardship, such as a job loss or illness. Looking at pay stubs, bank accounts. Rather like the reverse of reviewing the loan all over again – to see the person can’t qualify. Even then, they’re skeptical when a deal is on the table.

In addition, title insurance companies are being asked to review the deal as well. After all, while a deed in lieu of foreclosure saves the lengthy and expensive process of foreclosure, it brings in all intervening liens. That means if there are judgments because credit cards are behind and there are corresponding judgments against the borrower, or there are outstanding child support liens, medical assistance liens, State or Federal Tax Liens, or a host of others, these liens will have priority over the deed in lieu, making the transaction very sticky, and perhaps impossible.

I am seeing droves of advertisements for books and classes to “Buy Foreclosures and Make Money!” I pity the person who believes these ads and loses their shirts on a business that is over the heads of most professionals in the industry.