FedBizOpps – The government’s efforts to help Americans obtain the dream of home ownership may actually be backfiring, ie, causing more home foreclosures. This means entrepreneurs who want to start a foreclosure cleaning business will have tons of work – for some time to come. Following is why.FedBizOpps.Gov
Home Loans: How Easy It Used to Be to Get a Mortgage
Since the home foreclosure crisis started in 2007, lenders have tightened home loan qualification standards. There used to be “exotic mortgages” like zero percent down home loans and 50-year home loans available that made it easy for borrowers to get a mortgage.FedBizOpps.Gov
And, credit standards (which, looking back seems like an oxymoron), were next to none. If you had a credit score of 580, you could get a home loan with no money down, eg, 100% of the costs were covered. FedBizOpps
Home Loans: How Hard It is To Get a Home Loan Today from Traditional Banks
Fast forward to 2010. These days, traditional lenders have gone back to credit standards our grandparents were used to. Nowadays, banks are requiring a 20% down payment and stellar credit to get a home loan.
Gone are the exotic loan packages where anyone with a pulse could get a mortgage. FedBizOpps
FHA: Leading the Way for More Home Foreclosures?
Apparently though, until recently, the Federal Housing Administration (FHA) didn’t learn their lesson the way banks did early on in the foreclosure crisis, which started in the fall of 2007. As late as 2007-2008, the FHA was still insuring home loans of those with less than stellar credit (eg, 630 credit score) and requiring a nominal 3.5% down payment.
Critics argue that this has not only propped up the housing market artificially for the last few years, but it is also leading to a “crush” of new home foreclosures that are coming down the pike. Proof? Fed Biz Ops
“About 9% of FHA borrowers have missed at least three payments (up from 6.5% a year ago (2009)), and experts say that means a new wave of home foreclosures is coming.” [Source: 2/2/2010 MSN article, “New wave of foreclosures coming”]
By continuing to use lower home loan qualification standards, the types of buyers who bought homes backed by the FHA are have proven to be much more likely to default. And if this sounds familiar, you’re dead on.
This kind of lending* by the FHA (similar to subprime mortgage) is what led to the home foreclosure crisis in the first place. According to the 2/2/2010 Washington Post article, “Rising FHA default rate foreshadows a crush of foreclosures”:
The problems are rooted in FHA mortgages made in 2007 and 2008. Those loans are now maturing into their worst years because failures most often occur two to three years after a mortgage is made. Fed Biz Ops
So we’re just at the beginning of the home foreclosures to come, if this holds true (and data suggests that it does).
Want to Capitalize on the Home Foreclosure Crisis?
According to Entrepreneur, a leading online site for small business owners, four of the Top 10 Fastest Growing Franchise Opportunities in 2009 were some type of cleaning company.
Furthermore, even when foreclosures no longer top the news, a foreclosure cleanup company will still be a profitable small business because as long as real estate is bought and sold, it will need to be cleaned out, painted, repaired, boarded up and/or maintained.
|May be reprinted with the following, in full: To learn more about how to start a foreclosure cleanup business, log on to ForeclosureBusinessNews.com. You’ll also find in-depth info on the latest home foreclosure news eg, the #1 secret your lender won’t tell you that can stop foreclosure, the timeline for foreclosure in all 50 states, educational videos about the foreclosure process — and a whole lot more. FedBizOpps Gov|