U.S Foreclosures Filings Sets New Record High

The second wave of foreclosures has arrived. Is the American economy ready?

The tide of potential foreclosures has been rising for quite some time. The U.S. economy had a brief respite while banks and lenders tried to decide which way the political winds were blowing. This may have briefly delayed many of the recent filings.

Now that the new administrations policies are clear, the cleansing of the banks balance sheets begins anew. Combined with holdover filings from last year, we are beginning to see the start of the ‘second’ wave of foreclosures.

This so-called second wave is caused by the Alt-A and Option ARM loans that are scheduled to adjust or come due between now and November of 2009. Many of the resets on these loans will cause real estate investors and laid off workers to default.

A recent article on MarketWatch.com (http://www.marketwatch.com/story/us-foreclosures-reach-record-rate-in-april ) suggests that the delay was caused by the moratorium on the industry that were recommended by regulators. Some believe that the recent stabilization in overall values across the nation may hold steady even though there is this new round of repossessions hitting the books.

Opportunity abounds for real estate investors with the means or the creative drive. With multiple options available, investors can still invest in real estate and with rising rents and low prices real estate investor activity in the market place appears to be increasing again.

While many thought that greed and over zealous real estate investors were partly to blame for the bubble in the economy, some economist have argued that prudent and professional real estate investors need to be active in the market in order to truly stabilize home values.

There are many lenders that have started to lend to investors again. Cautiously these lenders have entered the market and are lending to those that can prove experience and credit worthiness. Still other real estate investors are slowly testing the markets using creative strategies that skirt the traditional lenders and allow them to access capital that allow them to build and manage large portfolios of rental properties.

The time is ripe for real estate professionals. These are the times when fortunes in residential real estate are made and many people are seeking out the abundant opportunities in this market. Is the time right? Is America ready for the second wave? Only time will tell…

You Know it is the Bottom When...

In a shocking display of just how bad the foreclosure crisis got in California, a Texas bank decided that it was more cost efficient to destroy 16 brand new homes in a development they took back through foreclosure than to try and finish and sell the homes.

This is true evidence of exactly how far prices have crashed and is the perfect indicator of what happens when a crash begins to reach the bottom. When the decisions like this can be made and are sound business decisions it can be a sign of that things have gotten about as bad as they are ever going to be.

This is called capitulation and it is what many experts have been looking for in order to 'call' a bottom. This is exciting because positive signs after this may be not be false positives. Future positive market activity may be the real thing.

Stay tuned.... Ben Bernanke speaks today, analysis tomorrow.