This just rubs me the wrong way...

[Rene]

while there are people that really want to keep their homes and cannot truly afford them.... then there are THESE kind of people that "made bad investments".......:mad:

http://www.npr.org/templates/story/story.php?storyId=123399703

[admin]

But this is one of the next shoes to drop. Banks don't want those properties. Foreclosure will put them underwater and out of business because their required liquidity will evaporate. Supply of homes, even at a reduced value will exceed demand so they can't sell them. That is one of the unintended consequences of putting people in homes they can't afford. It is the same with commercial. As I understand it, the ARM's on homes are going to start coming due in large quantities and at the same time, commercial loans originated in the boom days since 2001 recovery will also come due in large numbers. Then what are the lending institutions going to do?

I had a young investor tell me that she was going to start investing in homes where folks can't or aren't making payments. My caution was that even though the bank takes a hit and the value is down by say 40%, is that the real value of the property, or is it still less? Personally, I think that in many markets where homes were sold to unqualified folks in large numbers, many of those homes are not even salable at virtually any price.

Appraisers are having a very difficult time determining values as indicated by the high refusal rate of the lenders to make loans as appraised, even with substantial down payments.

There are a lot of bits and pieces of information out there that are very misleading. There is opportunity, but the 'rules' of buying that existed a year ago are no longer valid. We are in new territory, so anyone seeing "opportunity" better really know what they are doing or they will be in the same boat as those that bought and now are upside down.