Military and Foreclosure
According to Realty Trac, the amount of foreclosures in the military areas and towns has exceeded the nation’s average rate of foreclosed homes since the beginning of 2008. These military families remain stationed—usually for several years, especially during wartime—while the soldier is deployed. Some of the soldiers are on a rotating basis, thus, the family stays behind in the town in which that soldier is stationed. Families want stability. They want a familiar community in which to raise their families, and they want the ability to give their children a stable environment and a loving home
Unfortunately, during the last several years, there have been some people who have preyed on these families, and others. Yes, there are some unethical, ruthless, and unconscionable people in the mortgage brokerage and lending industries.
Military families have been shipped all over the country and across the world. In every move or relocation, their bills may take some time catching up with them, and this has created a vicious circle. By the time the bill arrives, it is already late, and this lateness may have created a derogatory status on their credit reports and scores.
This author has a family member that has been caught up in this mess, and is still dealing with this issue. As her husband has been deployed overseas in Germany, Korea, and Iraq, she faces the added time delay for the mail catching up with where he was currently located.
During this process over the past four years, she has been approached by several people to purchase a home. She so desperately wanted to purchase a home, and was told by these people that she could afford to do so. However, in going over the details of her circumstances, I became aware that there was no way that she could have purchased that home and still lived comfortably. She is now biding her time, and when all is right, she will purchase a home, when she is ready to buy. Why does this happen? Because they—families like this—are just at the brink, the fine line of passing credit-wise, to purchase a home they can barely afford. This is the military family’s dilemma.
This problem has occurred in various parts of the country; it is not just localized in only military towns. Throughout the country, there are “hot spots” such as Vegas, the Atlanta area, and a few others, so check to see what is happening in your area. Be informed concerning in what and where you are investing and do your due diligence. There are many properties and some banks who really want to move these homes, so take a shot at it. All they can say is no, but if they say yes, then you are good to go!
Just remember this. As much as we want the deal, just like anyone else, as investors, we too must keep in mind why we are procuring the property. As long as the numbers work, then it is a do-able deal—if it is not…don’t do it!
While doing some research, I discovered that the VA had authorized the least amount of VA loans for veterans in many years. These subprime mortgages the financial institutions were offering had great low rates and easy terms to get into the loan, compared to the standard VA government-backed loans that were created for the “G.I.s” as well as the general populace, hence the foreclosure problems.
The Housing and Economic Recovery Act (HR-3221) had been set into action to protect military families. However, the given nine months of mortgage protection, after their return from active duty, can help tremendously and is much better than the original 90 days afforded by its predecessor. In some areas, the prices of homes far out-price the VA loan caps for VA loans, and the result is that the family must shop the commercial finance market for their purchases. Like the rest of us, they are at the mercy of what is available. The VA may eventually raise the cap for their loans. Still, as an investor, if we are diligent and willing to put forth the effort, we can find good deals out there.
As with any important decision in our lives, when considering the purchase of a property, we need to be certain to ask ourselves the right questions. Some of these questions are: 1) Why am I purchasing this property, or what is the purpose for this property? 2) Is this property a turnover wholesale, a long-term rental, or keeper? 3) How much can this property bring in? 4) What is my output of cash on this property? 5) How much am I going to offer? 6) Did I do all diligence possible?
After answering these questions, you might have an idea of what you may want to offer, as these questions will help you determine your bottom line.
Try to keep up with what is happening in the financial world. There are legislation and programs that are up-and-coming or recently put into place as a result of what is occurring in the economy. You can search the web for what is new. You can also ask your attorney, or even with your title company, to obtain another perspective. The more informed you are, the more competent you become and the more confidence you will have.