Foreclosure Reviews A Threat To Investors?

The news has been flooded with reports on the announcement that close to 4 million homeowners could be having their foreclosure cases reviewed. So what does this mean for real estate investing pros? Does it mean they may have to give homes back? Will it mean another foreclosure halt or more banks going under?

New orders have been commissioned, ordering banks and mortgage companies to review these millions of foreclosure that occurred in the last couple of years which may have been done improperly. While it is the Office of the Comptroller of the Currency which will be sending out letters to borrowers asking if they want their cases reviewed, ironically it is actually the same lenders who made these loans and who are suspected of wrong doing in the foreclosures in question who are to do their own reviews. While the orders specify that compensation should be paid in cases where a ‘borrower suffered financial injury’, there is no specified amount and obviously no motivation for lenders to do so.

So for now, those in the real estate investing business can rest easy that it doesn’t appear that any properties will actually have to be returned to previous owners or that this will cause any further halt in the flow of REO deals. If anything, those homeowners, if any who receive compensation from mortgage companies will be flush with more cash to buy another home or at least put down a down payment on a rent to own property.

Keep in mind that many of these ex homeowners will never receive their notices since they have obviously moved. So perhaps this is something to educate your pipeline of real estate investing prospects on and then stick with them so that you can help them once again claim their piece of the American Dream.

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