It looks like foreclosures are on the rise again. Things started getting better in October 2010, and then we had fairly steady declines. As of April 2015, there was a sharp increase to early 2013 levels. On the chart at left, light orange represents foreclosure starts, and dark orange represents completed foreclosures.
Experts say the increase is because the interest-only HELOCs, from 2005 through 2007, are now either maturing or switching to fully amortizing loans. Many people can’t afford it, so defaults are on the rise. Look for more opportunities for short sale investing, and foreclosure investing.
It’s crazy, but many lenders ARE NOT ALLOWED to negotiate significant changes to the HELOC loan. On the other hand, they are legally allowed to approve a short sale, receive a small payment or a very minor payment at closing, and then set up a payment plan for the balance at 0% interest over 15, 20, or even 30 years! Sad for the homeowner, who must sell their home. Stupid for the lender, who loses all that interest. Good for the investor. Ah well, we live in the world we are in, and have to act accordingly.
Double click on the graph to see a large size.