The recent moratorium announced by Bank of America to halt the foreclosure process in all 50 states while it reviews whether staff may have cut corners while processing the paperwork will extend the foreclosure crisis further.Analysts predict that a moratorium "could further depress housing prices and said it would be very damaging to exactly the kind of people we're trying to protect". This announcement comes on the heels of of a move made by Bank of America, along with JPMorgan Chase and GMAC had halted foreclosures only in the 23 states where courts have jurisdiction over home repossessions. The moratorium puts in flux the opportunity for many investors evaluating foreclosures as potential investments. Many investors that have deals pending or were evaluating upcoming deals heading to auction, may be forced to wait even longer for those deals to come to fruition or they may not happen at all.
This scenario alone makes investing in REOs an even more attractive opportunity for investors. Available REO inventory has already gone through the foreclosure process and been returned back to the Bank. In many cases, the Bank has winterized the home and worked with its team to prepare it for marketing. It is already at an affordable price, but still providing investors the opportunity to negotiate. More importantly, as is sometimes the case with foreclosure properties, you do not have deal with the eviction process of the previous tenant or homeowner. Buying a foreclosed home can come with some emotional ramifications for the investor as the reality of "removing a family from their home" becomes a real-life part of the process. Oftentimes when purchasing foreclosed homes, you have to do so quickly without much time to evaluate the property or the quality of the investment. You could be stuck purchasing a property where renters have a valid lease in place that must be honored for 90 days after the foreclosure sales process has been completed before you can take possession of the home. You have to pay the carrying costs during this time period and you do not know the state you will reacquire the home in after it has been vacated. Investing in REOs provides a greater opportunity to evaluate the quality of the investment prior to acquisition and poses less risk for your investment dollars.
Look out for more upcoming blog posts on this topic and upcoming seminars that we will hold on investing in REO properties. Join our meetup group at http://www.meetup.com/REO-Bank-Owned-Home-Investors-Meetup-Group/ and join us for an upcoming meeting. Please feel free to contact me at any time to learn how you can get started investing in REOs at 206-300-2693 or contact me via email at firstname.lastname@example.org to get on a sheet for our weekly hot list of REO properties. All information is private and confidential.