Foreclosure and REO Properties Expert Advice

The Banking industry, specifically the mortgage lenders, are on the verge of a massive wave of foreclosures dwarfing anything like it in the past 75 years. 

But, banks seem to be blind to the fact that they cannot deal with this as they have in the past.

The numbers are so big that most lenders probably hope that the problem will somehow magically go away. 

Unfortunately, that only happens in fairytales.  The banks that will emerge as the winners from this fiasco will have to take an innovative, aggressive, and  proactive approach. 

Lenders that want to stay “ahead of the curve“  must look beyond the traditional ways of servicing delinquent loans. Those that want to attempt to keep politicians and regulators at bay will need to develop an image that is both positive and caring for their industry and community.
 
The momentum of psychology, perception, and social acceptance are working against mortgage servicers. 

We’ve all seen or heard of them,…..the  “infomercial”  that tells how to get rich in real estate.  Now, the new twist is how to  become a “short sale expert”  and get rich in real estate.

Another opportunist touts a  “service”  whereby for a fee, borrowers will be taught and coached on how to  stiff  their lenders,  by staying in the house as long as possible without making any payments,……. then simply walking away.   

The banks are going to be targeted and taken advantage of by all  sorts of unscrupulous groups if they don’t act NOW to protect themselves. 

The statistics for this phenomenon are overwhelming. 

With over $130 billion in losses having already been taken, some experts like Jim Grant of The Interest Rate Observer predict they will dwarf the savings and Loan crisis of the 1990’s.

Bill Gross, the bond guru of PIMCO, thinks that the total losses will be even higher and closer to a half a trillion  dollars or more. 

I’ve read that others are saying the number could reach $1 Trillion dollars possibly.  I believe that we are currently only in the first quarter of this ball game. 

With foreclosures reaching record levels and climbing, lenders need to act now to head off more trouble later. 

The sooner that a bank acts, the sooner they will save money,  and the more money they will save overall.  Lower interest rates will not save these homeowners from foreclosure,  as  liquidity abounds;  it is a matter of trust that the banks must rebuild. 

Bad loans will not suddenly perform  because of lower interest rates.   Lenders need to create  “goodwill”  so as to deflect the notions of being  predatory and adversarial.  

The ball is in your court,  bankers;  you can either rise to the occassion or sit back and continue to do business as usual and see what happens.
 
Until next week,
Tully