Window is closing for foreclosure properties.

With the $700B rescue plan finally approved, a lot may change in the foreclosure field. Assume each bad loan taken from the banks is $300K, also assume $100B is wasted in the process, that will rescue $700,000,000,000/300,000 = 2,000,000 homes from forclosures. Because the bad loans has about 70% salvage value, that will rescue even more homes.

There are about 1.5 million foreclosures in 2008. If the number is the same in 2009, virtually all the homes will be rescued from foreclosures. Because it takes time and steps for this to take effect, there will be still homes forclosed, but the number will be significantly lower, and the banks will be reluctant to sell them at deep discount. From now on, the banks will deliberately slow the foreclosure process before the bad loans are taken over.

Of course, the $700B will also be used for other bad loans: credit cards, car loans, etc. But the dollar amount will still be enough to rescue all the homes. Remember that the last subprime loans were made in 2006, and by the end of 2009 essentially all the subprime will have been reset.

So the window for buying foreclosure properties is closing, maybe faster than a lot of people think.

For those who have bought the foreclosed properties recently, they might have just bought at the bottom.

[cultuslake]

Thanks for the comment.

[淡极]

congratulations! you are one of those bottom fishers