Foreclosures, 2.2 million subprime loans can't be wrong

The Foreclosures are coming, the foreclosures are coming! I keep reading and hearing about the coming wave of bank foreclosures and I’ve been asked recently by a number of folks, “what does this mean?” “Is there an opportunity here for me to make some money and if so, how?”

Before I answer that question I think it’s important to spend just a minute explaining why there is so much chatter about the subject and why it has become such big news in the press. I mean between the USA Today, The Wall Street Journal and The New York Times, I must have read half a dozen articles on the subject of foreclosures and related issues such as subprime lending, and subprime loans yesterday alone.

Now I’m not going to go into a lengthy discussion here on how the mortgage industry works but, the basic issue is this. Over the past few years the mortgage industry loosened their standards for borrowing money and as a result a lot of people were approved for loans that several years ago they never would have received. To compound issues, many of these loans carried adjustable rates and low initial teaser rates which enabled borrowers to qualify. This pool of mortgages is what is referred to as subprime loans.

Well now the rates are adjusting, monthly mortgage payments are increasing and it’s time to pay the piper. The problem is it’s forecasted that the borrowers, to the tune of 2.2 million of them, don’t have the money and won’t be able to make their payments. If they don’t’ make their payments then the loans go into foreclosure and the borrowers lose their home and have their credit ruined. Although, I don’t know that this means much considering most of these borrowers didn’t have much credit to start with.

So, what does that mean for you, or me, as a real estate consumer??? Are there opportunities here to make money, save money, prevent a foreclosure or help someone out? Yes, yes, yes and yes.

Over the next few days I’ll be writing from these various points of view and discussing some different real estate buying, selling and investing strategies and options available. Please be sure to keep coming back and as always, I welcome your comments and feedback.