The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. Yet well-funded investors in real estate are seizing upon this opening to profit from an profoundly profitable new opportunity.

The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.

Let’s take a moment to analyze the basics of this incredibly lucrative business.

Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.

Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. After a certain period, the lender will then formally begin foreclosure proceedings. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

When a defaulted property is placed up for auction, the foreclosure process is completed. Ownership of the property is returned to the lender if the property is not sold at auction. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. However, the purchase of a ‘package’ (or group) or REO properties is the trade-off for receiving such great prices.

Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. There are many sources of funding for these transasactions including: hard money and commercial financing, as well as non conventional sources such as hedge funds and private investors. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Salvatore Buscemi of Dandrew Capital Partners, a hedge fund in New York.

The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.

The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity.

Consider with me, if you will, the fundamentals of the Bulk REO business.

Understanding of the foreclosure process is central to understanding Bulk REO investing.

As a borrower becomes increasingly behind in his mortgage, the lender regularly calls and writes the borrower with default warnings and threats. The formal process of foreclosure begins at the lender’s discretion. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

Foreclosure is completed when the defaulted property is auctioned. If there are no buyers at the foreclosure auction, the lender regains title to the property. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.

REO properties are usually listed for sale with local real estate agents. However, REO properties are now frequently sold for far less than their ‘book value’. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.

There is huge profit potential in these REO packages for qualified real estate investors. REO packages are easiest to buy and sell with a well regarded source of financing in place. There are many sources of funding for these transasactions including: hard money and commercial financing, as well as non conventional sources such as hedge funds and private investors. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Sal Buscemi of Dandrew Capital Partners, a New-York based hedge fund.

You are usually past due on everything from plastic cards to utilities to your bank loan and your lender is out of patience. The lender is calling you regularly and telling you your house will become a bank foreclosed house if you do not pay up. Where is the cash going to come from, though? You just do not have it. Then the bank will go ahead with their threats and your household is in foreclosure. You get the official word from the lender through the mail.

What You Could Have Achieved

In the event that your residence is not a bank foreclosed house yet, there are however things that you can do to stop the process. Be certain to communicate with your loan company before it gets that far. Tell them what your position is and what is leading to your economic troubles. If you’re frank with them, they’re more prone to work with you and continue to help you out.

You’ll have to set everything concerning your financial conditions in writing and sign it so they have a copy for your record at their offices. The more data you can provide them the better. Let them know what supplementary payments you are usually striving to pay and more importantly, everything that you do to try and get your finances back again in order. Tell them regarding your position search as well as your endeavours to borrow cash from the family.

The more you communicate with them the more they are going to work with you so just take on any assistance they offer and even be happy they are doing something for you. Whichever you agree to, be sure to live up to your commitments. You need to do whatever it takes to halt your house from becoming a bank foreclosure property and one of the best ways to do that is to get your loan company on your side. You need them to become your friend and never your enemy in such a situation.

What You Can Do

Once the bank foreclosure home documents are filed, there is simply no taking them back regardless how nicely you ask. You can possibly catch up on your bills and the foreclosure process is still possibly going to move through. When you obtain the notice of foreclosure from a loan provider, there are some tasks you need to do. The longer you procrastinate to undertake something, the more the lender may increase fees and fines to your account balance making a bad problem possibly worse. You’ll want to attain a resolution at the earliest opportunity.

Find out through your mortgage lender what sum of money they want from you to be able to bring your account current. They will give you the amount and the time frame they need the money by or the quantity will be even higher. How much money you must supply them will be much more than you thought so be ready. That is what goes on when your home turns into a bank foreclosed property.

One of the main factors in the Obama foreclosure rescue plan is to assist borrowers in their endeavor to obtain the permission of their lenders to refinance their loans to help them avoid the foreclosure trap through the reduction of their monthly installments to make them more affordable.  To become eligible for participation in the program, the outstanding loan amount of the borrower should not surpass the prevailing market price of his home by more than five percent.  Another ingredient of the Obama plan is the offer of a bonus to a lender every time a loan modification application is allowed such that the monthly installments will no longer go beyond 31 percent of the monthly pay of the borrower.  The Obama foreclosure rescue strategy also helps Fannie Mae and Freddie Mac offer more new home loans by infusing more capital into these two corporations.

But statistics gathered during the month of September 2009 did not speak well for the Obama plan because it failed to have a substantial influence on foreclosures and home prices.  Those who were against the plan quickly capitalized on the observation and claimed that it had little chance of succeeding because of its deficiencies.  But those who are in favor of the Obama foreclosure rescue strategy pointed to several positive results.  The plan is believed to have put a stop to the decline in home market values and the rise in the foreclosure rate in a number of states.  But those who do not favor the President’s program were not satisfied, pointing to the small number of approvals for loan modifications despite the large number of homeowners that should have qualified.  Also, some critics of the Obama foreclosure rescue plan have criticized the lack of a strong economic basis.  But the Obama Administration continues to support the program and has claimed that a milestone was achieved when more than 500,000 applications for loan modifications were approved. More details can be found at http://www.bestforeclosurenews.com