Opportunity in the Midst of Crisis

Foreclosures continue to rise at a record rate and there is no reason to expect that trend to change within the next year. Many Adjustable Rate Mortgages, due to reset in the coming year, will experience a dramatic increase in interest rates. While the Presidents’ efforts to get lenders to renegotiate existing loans prior to foreclosure are gaining some traction, the fact is that you cannot refinance your home without an income. Unemployment is expected to increase to over 10 percent from its present 9.4 percent.

Deutsche Bank recently estimated that nearly half of all mortgages will be underwater by 2011. Based on those statistics, you can assume that the number of existing homeowners looking to upgrade or downsize will substantially decrease. The “buy and bail” phenomenon that occurred last year was stopped once Fannie Mae and FHA modified their lending guidelines, which effectively restricted homeowners from walking away from their current residence and purchasing a new primary residence.

So, what’s the good news out of all of this? According to the National Association of Realtors, half of all homebuyers in the first quarter of this year were first time homebuyers. There are more government loan programs, grants and tax credits available today to first time homebuyers than have been available at any time in recent history.

Investors also have a tremendous opportunity to participate in the “foreclosure market.” The sheer number of properties has forced lenders, including Fannie Mae, Freddie Mac, FHA and even the VA, to make their properties available to investors at favorable interest rates and other terms.

All of these topics are covered in detail in my new book, “Homes Buyers and Mortgages.” Also, check out my new website, www.homesbuyersandmortgages.com, which provides links to these various State and Federal programs.