We all know the foreclosure rate is in the millions. Bank of America, after a brief moratorium to make sure they had solved the ‘robo-signing’ crisis, resumed pursuing foreclosures on homes in serious mortgage default at the rate of several hundred THOUSAND a month. This housing debacle is not over.
And it is affecting the market for real estate in many places all over this country. Some communities more than others.
What solutions have been tried?
-Loan modifications. That has worked for a very few, with a new default rate of about 50%. Good for the few. Just a deferral for the rest, with a continued impact on the real estate market.
-Short Sales. Yes, they can work. In some cases. Unfortunately for the homeowner, in some cases, the banks lose less by foreclosing so they make the short sale price unreasonably high and force a foreclosure. And they take a looonnng time- I had one that took 14 months!
-Low interest rates. Great for those who can qualify! As usual, when the pendulum swings too far one way, it reverses and swings too far the other. Yes, eventually balance is reached. But in the meantime we have gone from giving loans to anyone to giving loans almost only to those who don’t need one!
-Printing Money. Yes, Helicopter Ben has been buying mortgages, and printing money in other ways, trying to get some inflation going, trying to give folks a reason to buy now rather than wait until prices are higher. He has other tricks up his sleeve, and since this is all uncharted territory, they may work. I hope so!
-Real Estate Buyer Incentives. Those artificially boosted demand for a time, and now we are dealing with reality again. Demand was artificially inflated, and now has fallen off sharply.
The results of all this: market uncertainty, buyer tentativeness, increased numbers of foreclosures, title company concerns, banks with toxic assets they are having a hard time unloading.
OK, what is a Toxic Asset? It can be a non-performing note. The collateral may be real estate, it may be a yacht, it may be a business, it may be a car. The common ground is that the borrower is not paying as agreed, and the bank is holding a note that they put out money on, and are not getting paid. Net result: loss of profit, less ability to loan out money.
Banks are not in the business of owning the collateral…they are in the business of lending money, getting interest and getting paid back.
Anther toxic asset is a foreclosed property that the bank is not able to sell. The bank may have listed the property with no result. They may even have entertained some offers from direct buyers, but failed to put anything together. The clock is ticking…the bank examiners are coming…the quarter is closing. Profits are down because they are not collecting the contracted interest and because money is tied up and they cannot lend!
Sherwood Acquisitions can provide solutions to all these problems. And money-making opportunities at the same time.
Sherwood Acquisitions can acquire foreclosed properties in bulk- called REO’s. For Real Estate Owned (instead of lended on, as the banks’ business model designed). Sherwood can also acquire Non-Performing Notes - even Performing Notes when a quick cash infusion is desired.
What good does this do?
1-It frees the bank of some of its toxic assets so it can stay in business, lend money in the community, and contribute to a healthy economy.
2-It alleviates the threat of ‘shadow inventory’ that banks are holding. The real estate market is overshadowed by this threat-it makes buyers and investors wary of the future of real estate prices.
3-It takes properties out of vacant status, and frees them to be renovated, boarded-up buildings brought back into the neighborhoods, redevelopment going on. Employment of idle contractors. Creation of homes for sale or rent.
4- It provides opportunities for homeowners and investors to buy homes while the interest rates and cost of homeownership remain historically low.
5- Job creation. Contractors, realtors. It has been said that 25% of past years’ job growth was in the real estate sector. When we get real estate healthy again, unemployment will decline.
6- Home Retention. When a new investor takes over a non-performing note, if the homeowner has income, the note can often be renegotiated to be affordable. And if not, the short sale can be done quickly!
7- Investment Opportunity! Fund these REO and NPN deals with us, and reap some profits. Buy REO and NPN from us at below wholesale, and make profits. Check out our website at www.SherwoodAcquisitions.com and register there on the Contact Page. We are getting deals daily and will pass on what meets YOUR parameters!
Yes, Banks Can Turn Toxic Into Terrific! For all of us!
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