Even though it is the end of the month—better late then never — all of us at Default Research would like to wish you a happy and profitable 2008. Maybe the government was also thinking "better late then never," and now Washington is offering lower interest rates. Speaking of a profitable 2008 — lower interest rates is a plus for the real estate market as a whole, and even better for our customers!

With lower interest rates, our customers are able to profit in a variety of ways. For mortgage brokers, using our lists will allow them to refinance homebuyers into lower fixed rate loans. Investors win too because, with lower interest rates, banks are more willing to give out loans. This allows investors the credit they need to make purchases in the pre foreclosure market place. Another plus is that homebuyers have the same advantage with more credit available to make purchases. A win-win-win situation like this is definitely better late than never!

Let's move from national news to Default Research news. We are improving our already superior product as we move into 2008. I am sure you will notice the enhanced foreclosure lists with up to five homeowner phone numbers, phone number confidence scores, and additional trustee and lender information. Our clients already have a distinct advantage with the freshest foreclosure lists in the business, and these improvements will provide even more opportunities to contact homeowners in distress. We also plan to unveil a comprehensive foreclosure market statistic website to provide researchers a more comprehensive look at foreclosure trends in various regions. Finally, everybody in the Default Research family will be able to make news on our new blog that will provide users an ability to comment on various articles, share personal stories about their foreclosure experiences, and to post their own questions.

We have lots to get to in 2008 on a national level and on a Default Research level and we have 11 months left to do that. So, take a few minutes now and enjoy this month's newsletter!

Government Is Not The Answer To Fixing Foreclosure Crisis

As the presidential races heat up, the hot foreclosure market is sure to be a topic the candidates will have to address. No matter where they are campaigning in, what type of crowd they are addressing, or what party they are in, there are sure to be people in any audience who have been affected by the foreclosure crisis. and want to see closure.

According to Serdar Bankaci, President/CEO of Default Research, the best answer a presidential candidate can give when asked about how to fix the foreclosure crisis is, "I won't fix it."

Bankaci is not alone when he says that the private sector is much better equipped to correct the foreclosure problem. And Bankaci believes it already has started to repair the real estate market.

"Banks are renegotiating adjustable rate mortgages or freezing rates so homeowner can continue to make payments they can afford," said Bankaci, who lists foreclosure sales two to three weeks ahead of the competition. "Another option that banks are utilizing is selling foreclosed debt on the secondary market for far less than its value. Then these debt holders restructure the debt in order for the homeowner to afford the payments and keep the home."

That, Bankaci says, is an obvious win-win situation for the bank, the homeowner andhomeowner, and the investor. Without any help from the government, the bank is able to get rid of the default debt, the homeowner gets to remain in their home, and the investor is able to make a profit. This is a classic example of the free markets adjusting on their own without this president or any future president needing to lift a finger.

You can then see the frustration on Bankaci's face as he explains and pleads that, "banks don't even want foreclosures!"

And he is right. Evictions and the foreclosure process not only cost the banks a significant amount of money, and the banks don't really know what to do with the real estate once they have it. Financial institutions are not in the business of selling real estate and they do not want to hold properties in their portfolios.

Bankaci actually knows who wants foreclosures and it is his clients. These savvy investors take his fresh lists of foreclosures all across the country, buy properties at a discounted rate, and rent the homes as they wait for the crisis to end. Almost as important to the market, country and any politician looking to appeal to an audience, when these investors buy the property, they are helping a family escape their own financial crisis.

If it seems simple, it is. It's the economy, stupid!

"In a traditional free market economy, the private industry responds to a demand," said Bankaci., whos. "Currently there is a demand to correct the foreclosure market. This is already occurring without the intervention of the bureaucratic, costly, and slow federal government."

Making Money With Foreclosures

©Shane Backer 2007

In the current turbulent mortgage industry, there are many opportunities —and one of them is buying foreclosures. Default Research is a great source for excellent leads — maybe you've already started to buy them, which is a very smart move. Every single month more foreclosures hit the market. The most ever will hit in the fourth quarter of 2008, because that's when a huge number of adjustable rate mortgages will expire, leaving many people with payments they can't make. To make this work to your advantage, you need good leads (you're already in the right place for that), and you need to know what to do with them once you've acquired the properties. That's what this article is all about.

Several important strategies are available for making money with foreclosures. Two of my favorites are Lease Option to Buy contracts and the 2/1 Buy Down mortgage. Both of these exit strategies are very good ones — my advice is to pick one, master it and make it your niche.

To begin, you'll market your property in the local paper or on the internet as "Lease Option to Buy", offering to rent it for two years, with an option to buy when the two years are up. The rent will total slightly more than the cost of the mortgage, taxes and insurance. You'll also require a large down payment, typically enough to cover about six months of mortgage payments, in case your renter misses one. For example, say you get a foreclosure worth $250,000 for $150,000. You obtain a mortgage for $150,000. With an 8% Interest Only mortgage your monthly mortgage payment will be $1,000. Your yearly taxes are $3,500 and your homeowners insurance for the year is $900 (monthly cost $291 and $75 respectively). Your total monthly costs are $1,366. You rent the property for $1650 a month and get a $9,900 down payment at contract signing. This money is non-refundable to the renter but will come off the purchase price if the buyer exercises his option to buy.

This is just one example -- you can play with the numbers until they make sense for your situation. In any case, if you rent the property immediately, rather than waiting to sell, you'd get a monthly cash flow of $284 and an upfront fee of $9,900. If the renter exercises the option to buy after two years, you'll profit by the difference between your cost at foreclosure and the selling price (in this case, by $100,000). If the renter chooses not to buy, you keep the $9,900. By that time, the property will have likely increased in value and gained back a lot of its equity. The down market might even be over. At that point you could list the property at its current value or do another Lease to Own contract.

If you want to sell a foreclosure immediately, I recommend using a 2/1 Buy Down mortgage. Of course, you could sell the property on the open market to an end user who will be the new owner, which works well in a seller's market (few houses available to buy). However, we're in a down, or buyer's market (a surplus of houses for sale). — wWhen you're competing with many other sellers, it's harder to sell your own.

There are many unique and creative strategies for making your property stand out. Remember, you already have some equity, because you bought at foreclosure, so you have some room to maneuver when it comes to the selling price. In fact, you could just dump the property by listing it on the open market at way a good amount under value; -- somebody would jump at the chance to buy it, but that would eat away at your profits. There's a better way -- sell it for just-below market with a very unique mortgage program. The 2/1 Buy Down was created for a buyer's market. Understanding the 2/1 Buy Down will give you tremendous advantages when it comes to marketing your property. This mortgage product gives the buyer lower interest rates in the first and second years of the mortgage. The first year carries a 2% interest rate reduction, and the second carries a 1% rate reduction, which gives the product its name.

What does this mean in real numbers? Let's look at an example. With a purchase price of $300,000,300,000 and 10% down, the mortgage is $270,000. Say the buyer qualifies for a 5.9% interest rate on an Interest Only loan (the payment will cover only interest, no principal). The first year's interest rate would be 3.9% and the second 4.9%. Years 3-30 would revert to 5.9%. So how much would the buyer actually save in the first 2 years of the mortgage? At 5.9 percent, the payment is $1327.50. The 2/1 Buy Down makes the first year payments $877.50, saving $450 a month or $5,400 in the first year. In the second year, the payments go up to $1102.50, saving $225 a month or $2,700 for the year. Total savings: $8,100.

You're probably asking yourself, "Who pays for this buy down and where does the $8,100 come from?" From the equity in the house. As the seller, you forego this equity to create a benefit to the buyer. Why? Because advertising your house with a 2/1 Buy Down offers a huge incentive to the buyer, making it a more attractive buy than all the other houses on the block. Understand that as the seller, you set the asking price. Say you buy a foreclosure for $220,000. The correct market price is $300,000. You want to sell the house at market value, and there are six other houses selling for the same price in your area. But you're offering a 2/1 Buy Down, and the other sellers aren't. Plus, you're going to advertise the house with a payment amount rather than a selling price.

To explain, traditionally a seller would advertise the house with ads saying "House for Sale $300,000" ... just like all the other sellers of $300,000 houses. But armed with the 2/1 Buy Down, you can advertise the payment, instead of the price. People identify with payments. They know what they can afford. A lot of people believe the payments on a $300,000 house would be too high for them. Advertising the payment instead of the price will create a lot more calls and a lot more willing buyers. What's more appealing — "House for Sale, $300,000" or "Home for sale, $877 a month, 2and 2% first year interest rate reduction"? A lot of people can afford $877 a month. The end result: a happy buyer and a quick flip of the property for you, providing more cash to buy more foreclosures. A win-win.

Creative methods can help sell a house quickly and efficiently. You can even use these methods simultaneously. For example, buy a foreclosure with a 2/1 Buy Down yourself, then employ the Lease Option to Buy strategy. This will increase your cash flow for two years, when the renter will buy the property. If he chooses not to, you pocket the cash, then market the property to a new buyer with another 2/1 Buy Down.

Naturally, to make this system work, you'll need a ready source of mortgage money, and a broker who thoroughly understands the strategies. As a Senior Loan Specialist, I am well-positioned to help you navigate the foreclosure market from the financial end. I welcome your questions and look forward to working with you.

Shane Backer
Branch Manager-Senior Loan Officer
Robbins & Lloyd Mortgage
347 Fifth Avenue Suite 1506
New York, NY 10016
Office: 212.213.5120 X3008
Fax: 212.202.4396
Email: ShaneB@robbinslloydny.com
Web:http://www.ezmortgagedirect.com

How to pick a foreclosure data provider?

While it may seem like an easy decision, picking a foreclosure data provider can be just as vital as picking a doctor. A doctor will help your physical and mental health, while a foreclosure data provider can improve your financial health. Neither decision should be taken lightly!

In today's real estate market, which is in need of some heavy medicine, the foreclosure data provider you select could mean life and death for your business in the foreclosure market. Your first step in selecting a foreclosure list provider must be to fully understand all of your preliminary education programs before you begin using any company's information. Once you understand the magnitude of your profession, including best practices and the laws in your particular state, it is time to begin your search for a foreclosure list online.

My first suggestion as you begin your Internet search is to find the most reliable foreclosure company that covers the foreclosure situation in your area. I say that because foreclosure sites that cover certain areas of the country usually have fresher lists than the national companies. The site you choose must also provide the foreclosure documents that initiate the foreclosure process in your state or city, such as Notice of Default or Lis Pendens. Once a provider passes that initial and very important test, it is time to study their web site in detail.

We all know you should not judge a book by its cover, but by all means please "judge" a foreclosure provider's by its home page. Is there a lot of advertising on the site? Does it contain information about quick results for novice investors in the foreclosure business? If you answer yes to both of these questions, it is usually a red flag that this company is in the business of taking your money in exchange for bogus "educational" courses that cost thousands of dollars. If it is not overpriced and underwhelming courses they are selling, the web site may begin making harassing phone calls to sell their costly books or additional services once they have your contact information. In short, if you see unrealistic promises and over advertising on the site, you might want to think twice!

In fact, you should only have one concern when searching for a foreclosure company — do they provide accurate and fresh foreclosure data. It is great if a company provides sound educational material or offers other products to enhance your business, but that should never be the focus. My suggestion is that when companies begin to get heavily involved in education and mentoring, then they are not in the business of providing foreclosure data.

The final step is to talk with other companies or clients of other foreclosure providers and find out what they think about the company you have decided to work with. Remember, foreclosure lists are the basis of foreclosure investing, and without a solid, well respected list you will not be able to invest in properties and help families in economic distress. After reading my advice on choosing a foreclosure company, it is time for you to test my step by step process, and I am proud to put our Default Research web site to the test. Our main goal has always been is to provide the most accurate foreclosure lists in some of the hardest hit areas of the country when it comes to foreclosures. Take that final step and ask our competition — even they know we are the No. 1 provider of foreclosure lists in the areas we cover!

Southern California Foreclosures Increase 177 Percent in 2007

Los Angeles and San Diego Counties Have 87,000 Foreclosures

Mt. Pleasant, PA — Default Research, the premier provider of foreclosure real estate data in Southern California, is reporting that Notice of Defaults in Los Angeles and San Diego Counties were are up a dramatic 148 percent and 216 percent respectively in 2007.

According to Default Research (www.defaultresearch.com), 5.18 percent and 4.01 percent of the households in Riverside and San Bernardino respectively entered some phase of the foreclosure process in the last 12 months. Even though it was a devastating year for Southern California foreclosures, there is an end in sight.

"Throughout 2007, Southern California has been a hot bed of foreclosed homes," said Serdar Bankaci, President/CEO of Default Research. "I think we will continue to see some increases, but the foreclosure crisis could be winding down. The market is even showing positive signs, such as a decrease in housing inventories."

A possible improving economy is welcome news from Default Research, the provider of the most current and accurate database of foreclosed properties in Southern California. Still, median home sales in Riverside and San Bernardino are $377,000 which is well below the average of $467,000 in the state of California.

"While conditions are improving in Southern California, there are still a substantial number of three-year Adjustable Rate Mortgages (ARMs) that will adjust in 2008," said Bankaci, who lists foreclosure sales two to three weeks ahead of the competition. "Southern California foreclosures will continue to rise as more ARMs reset and people are unable to make their payments. Our statistics show that the foreclosure activity should max out by the third or fourth quarter of 2008."

According to Bankaci, foreclosure real estate is an excellent investment vehicle for those who want to profit and, at the same time, help families in financial trouble. He stressed that with less properties on the market, being the first to approach a homeowner in distress will become even more important in 2008. Therefore, Southern California investors will need the freshest and most accurate foreclosure data, which is offered by Default Research.

Free Book

Order the freshest leads from any Default Research county for six or more months and receive a free copy of, "The Pre-Foreclosure Real Estate Handbook: Insider Secrets to Locating and Purchasing Pre-Foreclosed Properties in Any Market.

Be sure to check out the forward in the free book written by Default Research President/CEO Serdar Bankaci. Again, to get your free copy, order any county for six months. To order please call 888-211-8396

South Florida Foreclosures Increase 35 Percent in 2007

Broward and Miami-Dade Counties Both See Over 13,000 Foreclosures

Default Research, the premier provider of lis pendens data in South Florida, is reportsing that foreclosures are were up 35 percent in 2007 in that area.

According to Default Research (www.defaultresearch.com), in Broward and Miami-Dade 1.75 percent and 1.45 percent respectively of households entered some phase of the foreclosure process in the last 12 months. Also in 2007, Broward saw foreclosures increase by 66 percent, while Miami-Dade had an increase of 27 percent.

"There is no end in sight for Florida foreclosures in 2008," said Serdar Bankaci, President/CEO of Default Research. "Median home prices are still decreasing as home inventories increase. That is a recipe for more foreclosures in South Florida. Last year we saw an average of about 220 foreclosures daily in our extensive coverage area in Florida."

Across the Sunshine State, the average median home price is $221,000. However, in the much more expensive South area of South Florida, the average median home price in Broward and Miami-Dade is $346,800. The larger price tags for the properties in South Florida have, however, actually hurt the market and recovery.

"Many investors have been burned by the foreclosure crisis and are just walking away from the properties in South Florida," said Bankaci, who lists foreclosure sales two to three weeks ahead of the competition. "South Florida foreclosures will continue to rise as more ARMs reset and people are unable to make their payments. My statistics are showing that our bank foreclosure list will continue to grow and it is unlikely that South Florida will exit the foreclosure crisis in 2008."

Bankaci knows firsthand about the South Florida market because he lived there in 2004. He witnessed the "incredible" price increases and watched the number of condominiums increase almost daily. Unfortunately as the housing unit numbers grew, the demand and money began to decrease.

"There is significant demand for rental properties," said Bankaci, who offers his clients the freshest and most accurate foreclosures lists. "I urge our customers to buy and rent out properties while they weather the foreclosure storm. With foreclosure real estate selling for discounted prices, investors are buying properties, renting them, and already getting a return on their investment."

What is the MOST IMPORTANT MOMENT in a real estate investor's life? It is the 30 to 60 minutes you are with a potential seller trying to get them to sell at a 20% to 50% discount to their homes value!

"Imagine Being Able to Consistently Get Seller's To Sell At A 20% to 50% Discount!"

Wonder if this is possible? It is if you are totally prepared and have a well- done professional presentation during that critical moment.

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