We’re still alive! After a month and a half of waiting for things to turn around, we realized that just the opposite is happening. There’s even more doom-and-gloom to highlight than ever before!!!!
US auto sales are bad (again), oil is bouncing around but still near an all-time high, everyone’s arguing about whether we’re in a recession or not (or maybe even entering a depression!), and the man himself Warren Buffet says things are going to be worse than anyone expects. Oh, and home prices are still falling off a cliff while foreclosures continue to skyrocket (BUT at least home sales are up since last month!!!!)
CNN is reporting that there’s a growing trend of investors/landlords who are collecting the rent but not paying their mortgage.
Charles Nelson has paid about $30,000 in rent since moving into a spacious four-bedroom home in August. He was stunned when a real estate agent knocked on his door recently and said the home was in foreclosure.
His landlord had not paid the mortgage since he moved in and the bank is now demanding the house back. Nelson will also lose his $7,700 security deposit. When he confronted the landlord, he says, he was given a terse response: “That’s none of your business.”
I believe it is his business, though not directly. Us unfortunate renters are vulnerable to displacement, given proper notice.
Sharga said that more than 38 percent of properties in foreclosure through the end of April were classified as “not-owner occupied,” meaning they were second homes, investment homes or rental property. That’s roughly 280,000 of the nation’s 720,000 foreclosed properties. The hardest-hit areas are California, Arizona, Nevada and Florida.
“What you had was dramatically overheated markets where people overextended themselves to buy overvalued properties and they used risky loans to get those properties,” Sharga said.
This is not much of a surprise, considering that everyone wanted to be a real estate investor. Can we blame it on the late-night infomercials promising riches and a life of luxury for playing with borrowed money, or do most people dive into a venture without a well thought out plan?
What we’d really like to know is whether these ‘investors’ stopped paying the mortgage because their interest-only period expired or they just decided to stop investing in a rapidly depreciating asset.
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