Is a real estate recovery good for those buying non-performing loans?
Expiring offers of cash for short sales, looming deadlines for tax breaks, an upward trend in mortgage interest rates, and rising REO prices all mean a rapidly changing real estate landscape.
This all means more homeowners stuck in their homes with fewer options, reducing their ability to refinance, and making it more costly to seek help or deal with their current mortgage lenders.
However, more signs of a real estate recovery expanding and taking hold, even if it is a shaky and uneven one, also means it makes more sense for homeowners to stay put and wait for their equity to return. This is even truer as the harsh consequences of strategic default are becoming more evident. This includes ex-homeowners being served lawsuits for old second mortgages as well as wages being garnished.
For buyers of non-performing loan notes this dramatically increases the odds that many loans can be brought current and turned into more valuable performing notes.
Some borrowers will choose to reinstate their loans themselves, others may have already been trying to get back on track but had issues dealing with the original lender, while others may need investors to provide a meaningful loan modification but will stay on track once given the chance.
Of course, not every pocket of the country is rebounding as fast as the likes of Miami and Sacramento. Some areas are still weaker, but they will rebound, too. Though for now they may actually offer the biggest discount as lenders in the hottest areas are more confident about obtaining high prices on their REOs. So, when looking for new non-performing loan acquisition opportunities don’t restrict yourself to only local areas.