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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