Subprime borrowers losing investment properties to foreclosure

Posted by: Prashant Gopal on January 18, 2008

Foreclosures are primarily hurting families who are losing homes they bought to live in during the boom. But plenty of investors, including subprime borrowers, are getting burned, according to the Mortgage Bankers Association’s Jan. 17 report, which examines mortgage foreclosures, modifications and repayment plans in the third quarter of 2007.

About 18% of foreclosure actions started in the 3rd quarter of last year involved properties owned by investors (These are non-owner occupied homes). What also emerged from the data is that many subprime borrowers were taking out mortgages to buy investment properties, especially in markets now getting hit hard by foreclosures.

In Ohio, which has one of the worst foreclosure rates in the nation, 34% of subprime fixed-rate foreclosures involved investor-owned properties and 21% of subprime adjustable rate mortgage (ARM) foreclosures involved non-owner occupied houses. In Nevada, the worst state in the country for foreclosures, investor-owned properties accounted for 36% of subprime fixed-rate foreclosures and 18% of subprime ARM foreclosures.

Table 6 (on page 19) of the report details the share of investment properties in foreclosure by state for prime and subprime loans.

Reader Comments

Martha

March 26, 2008 10:23 AM

Does anyone know if the IRS provision was approved for forgiveness of taxes in cases of shortsales of investment properties?
Desperate in Florida...

Dawni

May 5, 2008 10:28 PM

No. The Mortgage Forgiveness Debt Relief Act of 2007 applies to one's primary residence only.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Darcy

May 30, 2008 3:29 PM

My husband and I built a spec home and have been unable to sell. We may be risking foreclosure at this point. The loan is under our company name. If we do foreclose, will this effect our own personal credit?

Wendy

July 18, 2008 4:24 PM

I own 4 properties, one I live in and the others are investment. We cannot hold on much longer and will do deed in lieu of foreclosure. What is tax on investment losses.

lili

October 18, 2008 7:54 AM

I have a question if I walk away from my secondary home ( investment property) file for forclusure do I get any type of a lien on my primary home? Do I get any lien at all with tax? Please let me know

JTAYLOR

January 17, 2009 10:01 PM

I own 4 properties, one I live in and the others are investments. I am not getting rent from these properties and can't sell them. Two of the properties are in Michigan and the property in Florida is upside down, owing more than the appraised value. If I walk away and allow the house to go into foreclosure, can the lender put a lien on my primary residence? We can't afford to keep paying.

Lidia

February 24, 2009 11:43 AM

s kassim

February 25, 2009 11:51 AM

Can the lender put a lien on my primary if i cannot afford to pay for the investments properties cause i am upside down? Tried to work with lenders,not very helpful.

Mike

July 11, 2009 5:14 PM

I have two rental properties I intend to let go to foreclosure. Question: I'm told if the props go as a "short sale" then the mortgage company(s)is going to tax me on their loss between the mortgage balance and the money they actually get. If it just goes into standard foreclosure then I am safe.

What about judgements? Can the Mtge Co.'s issue a judgement against me? How do I ensure they don't? Owned the props for over 5 years. One has a ist Mtge only. The other has a 1st and a 2nd.

Thanks!

J Vance

July 22, 2009 6:59 PM

If you have rental properties,don't let it go to foreclosure. I would love to give you cash for it right now.E-mail me at jamesvancejr@yahoo.com or vist my website www.cash4cashflows.com/jvance2

J Vance

July 22, 2009 6:59 PM

If you have rental properties,don't let it go to foreclosure. I would love to give you cash for it right now.E-mail me at jamesvancejr@yahoo.com or vist my website www.cash4cashflows.com/jvance2

J Vance

July 22, 2009 6:59 PM

If you have rental properties,don't let it go to foreclosure. I would love to give you cash for it right now.E-mail me at jamesvancejr@yahoo.com or vist my website www.cash4cashflows.com/jvance2

John Beck Tax Foreclosure

August 12, 2009 1:59 AM

If you are paying rent on a property then there is no need to go on foreclosure .

Maureen

August 23, 2009 12:54 PM

I own 2 properties as investments -have had them for sale for 2 yrs with no luck. Now my husband and I face foreclosure on both - running out of money - lenders will not work with us on a loan modification - nor DEED IN LIEU OF - short sale is what they recommended - we just want the blance of our loans and - and walk away -

any suggestions - we keep paying good money into bad - and are sick about our credit and life savings being at risk.

any suggestions I haven't thought of yet ??????

would appreciate any input - ? what about a "short sale" company doing the work and splitting commissions with realtors that they put me in touch with- expert in the area in short sales. Has anypne dealt with one of these companies -and should I avoid them.

Maureen

August 23, 2009 12:54 PM

I own 2 properties as investments -have had them for sale for 2 yrs with no luck. Now my husband and I face foreclosure on both - running out of money - lenders will not work with us on a loan modification - nor DEED IN LIEU OF - short sale is what they recommended - we just want the blance of our loans and - and walk away -

any suggestions - we keep paying good money into bad - and are sick about our credit and life savings being at risk.

any suggestions I haven't thought of yet ??????

would appreciate any input - ? what about a "short sale" company doing the work and splitting commissions with realtors that they put me in touch with- expert in the area in short sales. Has anypne dealt with one of these companies -and should I avoid them.

James

September 2, 2009 10:53 PM

Maureen give jvance a call

mary

October 17, 2009 1:51 PM

My question if I walk away from my secondary home ( investment property) file for forclusure do I get any type of a lien on my primary home? Do I get any lien at all with tax? can i transfer the deed to my home under my wife's name, i don't want the bank to put a lein on it or be in any danger of losing my primary home.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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