Foreclosures Are Not Just for Sub-prime Borrower's

Everyday we are hearing the news the rising rate of foreclosures caused by the inability of sub prime borrowers to make their mortgage payment after their adjustable rate mortgage has reset, sometimes by at least 35%. But we are not hearing the other story.. Investors that are walking away from investment properties that they scooped up during the " boom" between the years of 2000 - 2005.

Many of the investors that are literally walking away from their properties bought numerous homes, hoping that skyrocketing prices would provide a good return. However, as the housing market slowed and values began to decline, these same investors found themselves facing foreclosure and bankruptcy because they were no longer able to afford their mortgage payments that often were tens of thousands of dollars.

Interestingly, the defaults in Florida, Nevada, California and Arizona are mostly investment properties, caused not only because the property values decreased, investors are having a difficult time getting tenants that are willing to pay the high rentals to cover the mortgage.

Adding to sub-prime borrower's, and investors defaulting on their mortgage loans, but homeowners who's homes have lost significant values, predominantly in California are walking away as well, they cannot find anyway to justify paying for something that was way overheated in price, owe more than the properties worth is and cannot find a buyer that is qualified or willing to make an offer.

Aggressive, exotic loan products coupled with liberal underwriting guidelines, and a surge of sub prime borrowers and rampant mortgage fraud all have led to the devastation of the housing market, which will take years to correct itself.

Legal experts are warning investors and homeowners about the consequences of just walking away from their homes and investment properties. It is recommended that they contact their lenders and try to find a solution, by modifying the loan or agreeing to a short sale. Foreclosure will do nothing but ruin the individuals credit and make it impossible or very expensive to get credit in the future.

In some cases, lender's can tap into an investor's other assets to satisfy the balance in the event of a default. Even if the investor borrowed through a Limited Liability or LLC, they can be responsible for the debt if they act as guarantors, and most lenders do often require that a personal be included as part of the loan agreement.

Along with ruining their credit, and possibly having their assets seized to satisfy the loan, investors may be faced with huge federal tax hits.

So as we focus on sub-prime borrowers foreclosures, it appears that the mortgage crisis is larger and more devastating than anyone could have known or imagined.