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Foreclosure Pitfall: Private Investors May Cost You Your Home

Jan 10, 2008
Foreclosures can be very devastating; the repercussions on your credit report can be devastating to you in the years to come. Having a property foreclosure will affect you for many years in the future. Make a valid effort in protecting yourself from a home foreclosure if possible.

There are is a growing number of real estate investors that would gladly place their money into your property in efforts to grow their financial portfolio. With the drastically growing foreclosure rates in the United States today, many new, "green" investors getting involved in the real estate market. If you are facing foreclosure then this may be good news, however beware of the dangers, and investor that has interest in your property, may adversely affect you in the even that they get into financial trouble.

Unfortunately, many of them have failed to understand that every property that they purchase is an investment that is tied together under their name. Therefore, if one property is in jeopardy of foreclosure, or the payments are in default, that leaves all their other properties in harms way. If you allow just one of the properties to fall into foreclosure or default on a loan, it could immediately affect the other properties. Using their cash to get out of a foreclosure or catch up on late payment, they are essentially tying their hands on the other properties. In a worst-case scenario, if several of their properties go into foreclosure, then the lenders may be able to take their other properties as a form of collateral.

Collateral provide lenders protection against financial loss, in the even that the borrower is not able to pay the loan on time. Prior to signing an additional note, mortgages, or similar loans be sure that you fully understand the consequences that are involved. Lenders are looking more and more at the collateral of investors, as they have taken huge losses in the past 18 months. Lenders are adding assets such as, cars, boats, investment homes, retirement properties or anything of value to secure a loan, therefore if your home is one of their listed assets then you too may be at risk.

Remember that threaten your financial position anymore by making an illogical, or unwise decision. The real estate business is shaky, at best, and you do not want to be in the middle of the storm when it comes. Recovering from your hardship is much easier to do when you make smart decision, and leave the bad ones to someone else.
About the Author
Thomas Bladecki is the author and can provide additional information about foreclosures and the current real estate markets visit Home Foreclosure Help.
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