Pennies from heaven
What occurred to the Real Estate market was inevitable. You see investors on wall street were essentially searching for high interest returns on their invested money. They were able to get these high returns by purchasing mortgage backed securities from a variety of lenders. Because they had been paying so well for these securities the lenders couldn’t create new loans fast enough to sell to the investors. In order to fashion more loans to wholesale they had to make it easy to meet the requirements for these loans. So now you have individuals with poor credit buying homes with little or no money down. Throughout most of the nation the value of real-estate was increasing so fast that there was in no way a problem with these individuals not making payments. If they were short on money they would merely refinance. Take out sufficient cash from their equity to buy some nice possessions and make payments for another six months. Well, this went on for approximately 3 years. Everybody was happy. The investors were getting a great return on their investments. The lenders were creation new loans charging points on new refinances. The clients were using their equity to buy BMW’s, Rolex watches and seadoos. A win/win/win right? Wrong!!!
What happens when you loan someone with poor credit 400k and they run out of equity? A mortgage calamity that’s what. The worth of real estate started to decline and the real value of property started to be realized. So now people that actually could not afford to make their payments could no longer refinance and obtain cash to pay the bank. So the bank forecloses. The dilemma was that it wasn’t just one family in difficulty. We’re talking about millions of houses and hundreds of billions of dollars. That’s a dilemma.
Banks are in Big Trouble
So many individuals are in difficulty with their loans that the banking institutions cannot yet keep up with all of the foreclosures right now. That’s how you can purchase real estate for pennies on the dollar. You seen banks are not in the business of holding property. They are in the business of financing money. Every added piece of property that a bank holds is that much less money that they have to lend out. This means a great opportunity for people that are motivated and would like to be prosperous. I’m guessing that means you. There are insane deals to be made right now. Banking institutions are selling properties for pennies on the dollar.