What are the causes of the high rate of foreclosures?

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In the first half of 2007, subprime loans made up 54 percent of the loans starting foreclosure. In the last half, subprime loans will make up 60 percent of the foreclosure starts. According to the Mortgage Bankers Association, subprime loans only represent 14 percent of all loans outstanding.

Most of the subprime loans are on the east and west coast, particularly south Florida and and southern California, but also New England and Texas. Most of the delinquenicies are happening in the Midwest. So what does this tell us?

Foreclosures are everywhere and are easy to find and profit from.

Historically the reason for default has not been loan type or because mortgage companies have made bad loans over the past few years.

The number one reason for default is from Job Loss or Loss on Income. This accounts for 36% of defaults.

The number 2 reason which accounts for 21% is due to illness in the family.

The number 3 reason is because people have taken on too much debt and is the one that all of the newspapers are talking about.

The 1st and 2nd reasons have always been there and will not go away. The additional of the mortgage problem is what has created the increase in the foreclosures we are seeing.

These top 3 reasons account for 70% of the mortgage defaults.

Another precursor to foreclosure is divorce and quite often someone that is going through foreclosure is filing bankruptcy to stop their foreclosure actions.

Lesson to learn from this.

If you want to get ahead of your competition, you should be targeting not only the the foreclosure list for your marketing efforts but also:

A list of homeowners in your farm area that are 60 days behind on their mortgage.
A Divorce List
A list of people that have filed bankruptcy and are failing out of their Chapter 13 plan.

By targeting these three targeted lists as well as the foreclosure list, you will crush your competition by getting the deals before they even know about them. You will be the only person contacting these homeowners and you will be the only game in town for their problem with their house payments. Go Get Em!

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