Here's a newbie musing.

Inflation pressure is for real. ARM's are coming due for hikes in still record numbers. The Fed is between a rock and my skull (well, maybe not quite that hard of a place).

1) Raise or maintain interest rates to stem the rising tide of consumer prices which is pretty standard practice these days.
2) Cut rates to relieve pressure on homeowners with timed-out ARM's, and risk fueling even hotter inflation.

Given the former happens, and I think odds are good, aren't we looking for a flood of BPO's and REO business?

Again, I'm new to this, so what do experienced hands think?

I think it's the early 90s all over again. Maybe not that severe, but I think we'll see a lot more foreclosures, short sales, REOs and high inventories for the next couple of years.

Back then we had many homeowners just walk away from properties. I think the same will happen, or is already happening now. With no down payment and dropping prices, it's easy to walk away from a loan. It's not right, but it is easy, credit be damned. All you need is one bigger size company to close or relocate, and the flood gate will open.

For example, Boeing announced they will close down their Long Beach, Ca facility. Several thousand people that will not be transfered will have to sell. Last time this happened in Long Beach, the foreclosure market shot up in a matter of days.

On the other hand, this can be a great opportunity to pick up some really good deals. Take a 4-unit apartment building I listed and sold back in 94 for $245,000. Today it's worth over 1 mill.

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Borino
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