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Copyright (c) 2009 Frank Patrick

The Next Foreclosure Wave is Just Beginning

You probably already saw the news trumpeted at the end of May that said a record 12 percent of homeowners with a mortgage had fallen behind in their payments in the first quarter, according to the Mortgage Bankers Association. The Association also predicted that the trend would continue until the end of 2010, six months after unemployment figures are expected to finally begin heading downward. That means REO listings will continue to rise for at least another two years.

What?s behind the continuing growth of defaults and foreclosures? The fact that so-called ?safe? homeowners are now beginning to feel the pinch of the recession.

The REO home boom began when subprime mortgage holders, who bought in the heat of the housing market run-up, couldn?t keep up payments on over-leveraged loans on ridiculously overpriced properties.

This new wave of record foreclosures comes as people being laid off and downsized are finding it hard to keep up with their bills. The number of people receiving unemployment benefits hit an all-time high in May with a record 6.78 million requesting financial assistance.

Credit counseling agencies are getting an increasing number of calls from homeowners with normal fixed-rate mortgages, who can?t keep up with payments because of business failures, loss of jobs or just loss of overtime pay.

Debbie Kohl, a housing coordinator trying to assist struggling homeowners in Henderson, Nevada, says, ?We?re hearing this from all walks of life: plumbers, electricians, dentists. I talked with a dentist recently who said nobody?s coming in anymore unless it?s an emergency.?

A common alternative for someone not able to pay their mortgage is to sell the house and become a renter. Now, however, that?s not an option in many areas where homeowners can?t sell their properties at a price that would pay off the remaining mortgage balance.

Banks are also not motivated to negotiate mortgages with homeowners who don?t have a certain amount of cash flow coming in on a regular basis. As they see themselves being stuck permanently underwater with their home, these homeowners will often simply walk away from their properties ? and there are services online that help them do just that. When you can rent a home that?s similar to the one you already own for $1000 less than your mortgage payment, why continue to put yourself in that kind of stressful situation?

This troubling second wave of mortgages just means more and more REO properties will be added to the already historic numbers that are being listed by REO sellers and agents. The good news is that, as the wider economy stabilizes, REO homes are more and more being seen as an amazing value and terrific investment ? so sales are moving upward. That means more and more opportunity for all REO professionals.

ASREOS is the first REO trade association founded by REO experts, and it features advice from top REO agents, access to an exclusive database of over 130 REO sellers, and profiles of its members in an online searchable directory of REO vendors that banks, lenders and asset managers can utilize when looking for local agents to list and sell their REO properties. Find out more at http://www.ASREOS.com .