Tuesday, October 16, 2007

Utah's foreclosure investors: Leeches or saviors?

Wander over to KSL.com Classifieds and you'll see lots of ads like this (click on image):

Note the puppies. They remove any doubt that this woman is just a pet-lovin' soccer mom who wants to help you. That's how most foreclosure investors tout themselves: someone willing to help out by buying your house at a substantial discount and then re-selling it for a large profit.

We actually believe that foreclosure investors can be helpful. For example, a friend of a friend recently lost her townhome. She was relatively unsophisticated and, as with many owners, by the time she realized she couldn't dig herself out of her financial situation, it was too late to sell the property herself and she basically lost everything to the bank. Someone willing to pay off her loan and throw in some cash for her equity, even at less than market value, would have been doing her a favor.

Still, it's hard to to feel good about an industry that makes its living off of other people's desperation (think payday loans). It's even harder when these self-proclaimed saviors practically gush about it. For example, someone sent me an e-mail this week from Alexis McGee, founder of Foreclosures.com. McGee calls herself a "white knight," and says:

By helping you achieve your goal of becoming a successful and ethical investor, the growing numbers of distressed property owners are also being helped. Everyone wins, making our world a better place.

Golly, that sounds neato. But it seems a little hard to reconcile with McGee's e-mail, in which she seems almost giddy about the surge of foreclosure notices that winter brings. "I love this time of year," she says -- the "peak foreclosure buying season." (Trust me, it's worth clicking on:)

Winter desperation: It's the most wonderful time of the year . . . .

One suggestion for foreclosure investors and their gurus: If you want credibility, try giggling less when talking about all the people about to lose their homes.


Anonymous said...

I feel the same way about surgeons. They make a lot of money off of people who are sick.

I am going to have to agree with Marx on this one. Profiteering in situations like these are just plain wrong.

Jesse Harris said...

Those foreclosure buyers probably don't know what they're getting into. The housing market is supposed to stay cool well into next year and prices are supposed to drop accordingly. I'm willing to bet that a bunch of these "investors" barely make their money back.

Voice of Utah said...

Hard to imagine a surgeon saying, "I love winter because that's when more people have car accidents, so I have more chances to help them..."