causes and consequences of the foreclosure crisis

Causes and Consequences of the Foreclosure Crisis

A look at the effects of the 2007 collapse of the banking and housing industries.

Housing or Real Estate Bubble – Definition

•Real property which rapidly increases to the point that unsustainable debt levels are reached relative to expendable income as well as other affordability indicators within the economy

• Housing bubbles are created when fast paced growth in the housing market goes unchecked and spirals out of control

 • Factors include lenient and predatory

lending, extremely low adjustable interest rates and a blinding speculative fever

 • Housing bubbles are generally

undetectable until after the burst

Housing Bubbles – How They Form

Reasons For The 2007 Burst and Recession

• Adjustable interest rates reset to higher levels

• In 2007, 1.3 million subprime borrowers defaulted on mortgages and were submitted through the foreclosure process

The Domino Effect

• High adjustable interest rates

• Millions of foreclosed homes

• Decline in home demand and home value

• Housing industry jobs were lost

• Jobs connected to housing industry jobs

were lost, etc

The Domino Effect

• Prime mortgage holders defaulted

• Banks accumulated more foreclosures than they could move, compounding the mortgage crisis

• Shareholders and investors panicked

• Lending was basically brought to a standstill, etc

• The Housing and Economic Recovery Act of 2008

Government Response

Government Response

• The Homeowners Affordability and Stability Plan

Foreclosure Help

• Talk directly with the lending institution

• Talk to a HUD approved foreclosure avoidance counselor

Foreclosure Help

Foreclosure Help

• Seek out state and local foreclosure assistance resources

Foreclosure Help

• Contact HOPE NOW which is an alliance of HUD affiliated Intermediaries

Foreclosure Help

• Contact The Homeownership Preservation Foundation which is also affiliated with HUD and provides foreclosure counseling and help

Foreclosures As An Investment

• Low-cost real estate foreclosures abound

• Millions of foreclosed properties sit with a flooded banking industry

Foreclosures As An Investment

• Every day, tens of thousands of homes are being repossessed

• Foreclosure properties are being sold for 50% or less of their actual value

• Short Sales

• Negotiate with banks on behalf of distressed homeowners

Foreclosure Investment Opportunities

Foreclosure Investment Opportunities

• Public Auctions

• Bid against other competitors for foreclosed properties

• Foreclosure Listing Services

• Normally found online

• Get the jump on other investors

Foreclosure Investment Opportunities

• Browse listings, photos and info

• Resources so you can invest with confidence

Foreclosure Investment Opportunities

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