The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.

The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.

The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now.

To understand Bulk REO investing is to understand the foreclosure process.

Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. After a certain period, the lender will then formally begin foreclosure proceedings. ‘Pre foreclosure’ is the name given to the time between implementation of the foreclosure proceedings and the public auction.

Foreclosure is completed when the defaulted property is auctioned. If the property is not purchased at auction, ownership reverts to the original lender. The lender then categorizes the property as ‘Real Estate Owned’ - or ‘REO’ for short.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. However, lenders are increasingly willing to take much less than their REO asset is actually worth. However, the purchase of a ‘package’ (or group) or REO properties is the trade-off for receiving such great prices.

The REO investment packages available today have provided a way to profitably capitalize on the U.S. recession. REO packages are easiest to buy and sell with a well regarded source of financing in place. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Salvatore Buscemi of Dandrew Capital Partners, a New-York based hedge fund.

As the as the financial train wreck from the housing crash keeps rumbling down the track across California, state lawmakers sent several bills that crack down on mortgage fraud to Gov. Arnold
Schwarzenegger’s desk which effectively kill the loan modification industry.

Recently California legislature jointly passed bills to ban loan modification companies from asking for upfront fees and make mortgage brokers put their customers’ financial needs ahead of their own
commissions. The Bills also propose to limit the size of pre-payment penalties and would add California to the list of states that allow prosecutors to file specific felony charges for those accused of mortgage fraud.

One of the Bills most sweeping mortgage reform bills this year, Assembly Bill 260, bans so-called subprime “negative amortization” loans where the principal balance grows even as the borrower makes payments. It also prevents mortgage brokers from collecting upfront fees prior to funding a loan for originating subprime loans and those with pre-payment penalties. The bill also limits the size of pre-payment penalties for
borrowers who pay off their loans early.

Lastly, it requires that mortgage brokers have a higher degree of duty to borrowers - that is, they must place the “economic interest of the borrower ahead of the broker’s own economic interest” when making loans. Skilled Brokers already do this, of course. And that provision is especially opposed by the California
Association of Mortgage Brokers. Fred Arnold, a Santa Clarita-area broker and the group’s past president, said the bill’s definition of fiduciary duty is vague and an invitation to “frivolous lawsuits.”

These bills were signed into law as California continues to ponder what to do in the wake of more than 410,000 foreclosures since the start of 2007, the aftermath of predatory lending practices and greedy brokers. It’s also a time of high unemployment in the state and a devastated real estate and lending economy.

During the housing boom, mortgage brokers could earn fees of ,000 or more for making risky subprime adjustable-rate loans, often to unsuspecting A contrary view would be the borrowers knew what they were
doing and decided to roll the dice in a surging market. many unqualified buyers got into homes they knew they could not afford but decided to engage in speculation in hopes that the anticipated record appreciation
in value would continue.

Some of the changes include the limitation of the lenders in collecting fees. Lenders are not authorized to collect any fee unless the borrower has already received the Truth In Lending or TIL. There is also a seven business day waiting period after the borrower received the disclosures before closing. Additionally, the borrowers do not have to pursue the transaction if they do not want to. It is not binding even if they have received the final TIL.

These bills were signed into law on October 30, 2009. While there is an interest in curbing abusive lending practices, there does not appear to be any discussion of the borrowers responsibility to become educated and knowledgeable about their own finances. There was also no discussion of effects of Governmental pressure to promote those programs, such as the Community Reinvestment Act. In fact, anyone who has read Thomas Sowell’s book “The Housing Boom and Bust” can understand how government deregulation of the banks and over-regulating requiring funds to make “affordable housing” available, actually created the bust. Further, there should be some discussion of the effect of banning up front fees which will tend to chill assistance to borrowers trying to run the gauntlet of lenders ad hoc loan mod programs. Instead of banning upfront fees, the DRE might consider expanding those programs to put out of work real estate professionals back to work and providing a positive stimulus to the economy. Not many load mod people are going to be able, or willing to work to help borrowers unless they can charge something up front. Anyone dealing in the load mod arena has found that the process can be extremely tedious and can last from 3 to 6 months or more for approval. Any loan mod processor would be hard pressed to fund those efforts for that length of time.

While much of the commentary seems to focus on finding fault with the lending industry, it leads one to believe that all borrowers in trouble were just unwitting victims. This simply is not the case. There were two parties to the transaction, a willing buyer and a willing lender. It’s time that people woke up and realized that it worked on both sides of the deal. Personal gain and profit were the motivators for both parties, not in long term thinking about cost or value

Resource Author Francisco Rodriguez H.
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A number of things likely come to mind when you think of real estate investing. Depending on how familiar you are with real estate investing already, you might think of real estate portfolios and real estate retirement plans, or you might focus on short sales, bulk reo investing and virtual real estate investing. You probably also wonder how these things play out in real estate investors’ life in the current economy.

You can learn a lot about real estate investing. The best way to optimize your real estate investing education is to know the basics ahead of time. Whether your target is short sales, bulk reo sales, virtual real estate or improving real estate investor abilities, you need to know some real estate investing basics. You should review these three real estate investing basics to learn things even some experts do not know:

1. You will always end up with a positive yield when you invest in real estate investing education. You can create thousands of dollars in potential wealth with each real estate deal. Knowing how to get that wealth is the key to success. When you know about real estate your odds of success increase with each real estate deal. Small investments yield big results when you invest in learning and then implement what you learn.

2. You can succeed in real estate investing regardless of the state of the economy. Many people think that you can only succeed in real estate when the economy is booming. In reality, a bad economic situation is not bad for real estate investors. You can often find properties to buy at deep discounts. Also, you might find deals that simply could not exist in a booming economy. In fact, real estate investing can turn the tide for a poor economy. When the economy is not thriving, short sales, bulk reo sales and virtual real estate can all thrive. Knowing how to do these deals can create wealth for you and save others from major financial difficulties.

3. You do not need lots of your own cash to be a successful real estate investor. You can make real estate investing a success regardless of how much money you have. There are lots of types of deals that you can perform with the money of other people. Private lenders will let you use their money if they know that you are a good investment. An investor who is a good investment knows as much as they can when it comes to real estate investing. Then you will represent a good investment to other people who have money for real estate investing but do not know how to use it.

Real estate investing is a great way to create a good amount of wealth. You will be able to create an income no matter what the economy. Using knowledge of real estate investing, short sales, bulk reo sales and virtual real estate you will be able to create success for yourself. Knowing real estate investing basics will help you succeed as a real estate investor.

Anyone wanting to sell real estate on his own might be in a quandary as to how to do it. One great problem he will face is how to value the house to set the correct market price, which involves many factors, among them sentiment. If you are thinking, how can I sell my house fast and for the best price, follow these tips.

House repair. The value of a house necessarily depreciates over time and usage. Those who sell property professionally know this and thus often recommend repairing the house –at least in the obvious places— to raise its selling value. Lived-in homes often bear marks: crayon lines, juice or coffee stains, scratches or nail holes in the wall and shiny newel posts where numerous hands have been placed over the years.These may be quaint and homey manifestations of the lives lived there, but many buyers want a functional house they can make their own marks on.

But the greatest reason is that a prospective buyer who sees a broken-down part of the house may immediately assume it may also have faults in hidden parts.That will automatically downgrade the real estate’s value in the mind of the buyer, arguing that expenses will be incurred to make repairs. And of course the reverse is also true: a well-kept house raises its intrinsic market value to both the seller and would-be buyer.

Therefore repairing that dripping faucet or torn downspout prior to putting the property on the market will enhance its selling chances. If the owner can show the buyer something new he did prior to marketing the house, the buyer would assume it is a well-maintained home, and he should not have numerous problems with the building. Actually, what sells the house is not the cost of repairs made, but the impression that repairs meant a well-cared for house.

House additions. A deck in the back part of the house to spend quiet afternoons in, a swimming pool for the children, a study room or small library where the student-children can keep their books and study, a two-car garage to stow the children’s outgrown bicycle in, even a breakfast nook can boost the house’s value immensely.  These are amenities that are worth much more than their actual costs, simply because not all houses may have them. Often, small things such as these can be very significant factors in the buyer’s decision-making.
So, the main strategy for selling property quickly is to make it more appealing by adding amenities where possible.  Such repairs and additions make the property attractive to the buyer, hopefully enough for him to buy it.

But in the final analysis, these repairs and additions are only plus factors in the real estate’s value. Those who professionally sell property will assist you in estimating your home’s selling value, based on many factors.  What the final selling price will be will ultimately depend on the agreement of the buyer and seller, even if it is the seller who initially proposes the selling price. A professional company or individual who sells property as a living can help you immensely in selling yours. They might even buy your house directly from you, if that is your best option.