The real estate, house foreclosure market crisis began when homeowners became unable to afford their mortgage payments, consequently losing their houses to banks and other financial institutions.

In 2002, risky loans sub-prime mortgages were given to people with low credit scores or bad finances by lenders and banks. Blinded by the opportunity to make easy profits these financial institutions offered low interest rates to attracted these not-so-qualified new homebuyers.

Many of these loans were adjustable rate mortgages (ARMs), which increased interest rates considerably after a year or so, making extremely hard for these buyers to keep up with their mortgage obligations. 


The predatory lender practices ultimately created an avalanche of foreclosures in America, leading to the home foreclosure market crisis in early 2007 that lasts until now and with no foreseeable end in the near future.

Furthermore, many investors looking to flip properties they bought at the height of the market

for an easy buck, found themselves in big trouble when the “bubble bursted" and the market took a nose dive, with houses loosing up to 80 percent of its values.


The good news is that there is a low inventory of homes right now and delinquency rates on newer loans are going down, meaning that a slow recover in the house market is expected in the next few years.

Also, the low prices create an opportunity those who have in recent years been priced out of the market to achieve the dream of home ownership. 


Foreclosure is the system that allows a lender to repossess a property from a homeowner in default, and sell it to recover the money due, plus unpaid interest and the costs related to the home foreclosure.

Tips for buying real estate foreclosure:

  • Research and study your local home foreclosure market
  • Hire an experienced and knowledgeable buyers agent
  • Get pre-approved for a loan in advance, before looking at properties
  • Have the home professionally inspected
  • Avoid foreclosure auctions and possibly even short sales if you are a beginner, focus on REO instead.

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DISCLAIMER: provides internet content that is designed only to entertain and inform and is not to be considered professional law/legal advice. Consult a licensed attorney or law firm in your State of residence who will advise and answer all your questions and concerns about any legal issues you may have.

House Foreclosure Crisis
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