Monday, April 18, 2011

Private Investors: The Forgotten Segment in the Foreclosure Crisis

That light at the end of the housing crisis tunnel isn’t getting any closer. America’s inventory of foreclosed properties is increasing. Financial institutions’ loss mitigation units are steaming full speed ahead with filing Notices of Default, and many analysts predict that as 2011 unfolds, these institutions will flood the market with even-more bank-owned properties that will continue to depress home values. An equally unappealing outlook is seen from the distressed homeowner’s perspective: high unemployment and other factors make it difficult for borrowers to satisfy their mortgage obligations and many are facing the threat of losing their homes. While Federal and State agencies have instituted programs to aid both major banks and borrowers through the crisis, for the private investor, income property may be left out in the cold.

A small, but potent segment of private investors comprise a niche industry that buy and rehab single-family properties and act as 1st lien-holders on the properties when they sell them at a higher price. As the fortunes of many trustors have changed with the economy, the initial circumstances under which deals were made between investors and trustors changed as well. What once seemed a smart and profitable risk to investors turns into an ugly liability as trustors miss their “payment due” dates, then miss the agreed-open grace period, and finally fall into the 30, 45, 60, and ultimately 90 day payment-delinquency pattern.

Private investors don’t have access to mortgage servicing platforms that generate automatic late notices to trustors and send delinquency reports to collection units as do the large banks. There is no “in-house counsel” to file liens; nor do private investors always have the capital base to easily absorb late payments.

The key for private investors is to partner with a default specialist at the first signs of trustor delinquency. As it’s in the best interest for the investor to keep a free-flowing revenue stream, default specialists will first look for alternatives that provide a win-win scenario for investor and trustor. The specialist can recommend a loan modification that provides the investor with cash flow and the trustor with a lower, more affordable payment. If a workout is not possible, specialists can explore short sale or a deed-in-lieu that affords the trustor an exit strategy from the loan.

If there is no viable alternative to foreclosure, the default specialist’s role still stands to act on the behalf of the private investor. The specialist will work through the complete cycle of the default including:

• Issuance of late notices and calculation of additional late fees if incurred
• Notice of Default filing and borrower notification
• Notice of Sale to borrower and publishing of Notice of Sale
• Eviction procedures
• Property rehab
• Sale of property to private party or through auction

Default specialists provide help for an unrepresented group, private investors that don’t get the attention or have access to the vast resources large lenders and distressed borrowers have. That light at the end of the tunnel just got a bit brighter for the small investor.

Asset Foreclosure Services, Inc. / Peak Foreclosure Services, a member of the Peak Corporate Network headquartered in Woodland Hills, California, specializes in a wide range of default servicing solutions to meet the needs of a diversified clientele including servicers, sub-servicers, banks, and private investors. We manage assets from a servicer's perspective to ensure cost-efficient and expeditious processing, whether it is a foreclosure, workout, short sale, bankruptcy, title claim, lien release, eviction, or other default scenario.

In addition to default servicing, the Peak Corporate Network offers mortgage lending, loan servicing, residential short sale, 1031 exchange, and real estate sale brokerage services. These services are available primarily throughout the Western United States for both residential and commercial real estate properties and loans.

Asset Foreclosure Services / Peak Foreclosure Services
5900 Canoga Avenue, Suite 220
Woodland Hills, CA 91367

Toll-free: 877-237-7878


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