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Could Rising Business & Consumer Credit Defaults Lead To More Mortgage Defaults?

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on Thursday, 17 February 2022
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Could an increase in late and defaulting consumer credit and business loans lead to more distressed real estate opportunities for buyers?


Mortgage loan defaults and foreclosures ended up being far lower than expected in the wake of COVID. Rather than a deep crash, house prices and sales rocketed. A lot of stimulus, forbearance plans, foreclosure moratoriums, and a strong housing market has certainly helped this.


Rising Credit Defaults

New bank data published by DistressedPro shows that while mortgage distress has been slowly improving, other types of credit are seeing more late payments and defaults


Among these are spikes in business loan, auto loan and credit card defaults. There are tens of billions of dollars in these distressed debt pools.


All of these classes of debt were showing increases in distress at the end of 2021.


How People Pay Their Bills

Typically, when consumers get into financial difficulties they first stop paying their credit cards. Then if they still can’t keep up they stop paying their car loans. Finally, if businesses and individuals still can’t keep up they start falling late or give up on making their house and real estate payments.


We also saw an extra 29,000 unemployment claims than expected in the second week of February 2022. Suggesting the job market may not be as strong as some thought.


While some areas of the economy appear to be doing very well, some experts wonder if we are actually heading into stagflation. A period of the economy in which inflation is high, but the overall economy is stagnant, and not really growing. Those conditions make it harder for businesses and workers. Their costs go up, but their sales and incomes may not.


More Opportunity For Real Estate Investors

The above all comes together to suggest that there may be more opportunity for real estate investors ahead.


With a continued rise in home prices we may not see a big rise in REOs. Banks are likely to be able to sell off these non-performing liabilities as mortgage notes before they get to that stage.


Commercial and residential property owners may also be able to sell their properties in the retail market before they lose them. They may not get premium prices, but the recent surge in equity could leave plenty of value on the table for everyone involved.


Keep your eyes out for more motivated sellers out there.

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What Types of Properties Can I Use Transactional Funding For?

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on Thursday, 06 October 2016
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Which types of properties and real estate deals can benefit from using transactional funding?

As the rest of the real estate world and lenders and banks began collapsing around 2008 transactional funding finally became available to the real estate investor community at scale. Transactional lenders, private lenders, and big funds provided essential liquidity and credit to keep the market alive, and rebounding.

More lenders have now returned to the market, and new conduits are popping up with new twists on asset based lending in order to try to keep fund and bank money working. With all these distractions some investors may not have tried the advantages of transactional funding yet, or may not be aware of how sources like Best Transaction Funding can boost their business in the current environment and make more deals possible. So why use this type of funding? How can you use it?

Property Types Your Transactional Lender May Fund:

  • Single family homes
  • Condos
  • Multifamily properties
  • Commercial real estate including; mixed use properties, hospitality, retail, and office
  • Land and lots

Types of Deals Your Transactional Funding Source May Finance:

Transactional lenders surged in demand when the market was over bloated with REOs and short sales. Yet, there are many, many transactions and scenarios in which they may be used right now.

This may include:

  • Vacant properties
  • Banked owned homes
  • MLS listings
  • Hurricane damaged properties
  • Fire damaged homes
  • Wholesale deals and reverse wholesale deals
  • You lender may even fund mortgage notes

Advantages of Using Transactional Funding:

Transactional funding offers many obvious benefits such as 100% financing, no appraisal or credit score requirements, and great speed.

This, and instant POF letters can all help real estate investors make better offers and be better positioned to compete for acquisitions. It also means being able to take on much bigger deals, regardless of your cash on hand. Some may want to begin using this financing tool much more frequently to leverage lower risk real estate investment strategies as the market begins to shift.

How will you use it?

 

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

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