There are a few reasons why 2009 will be a better year for you in REI. I am fairly new to the site so let me introduce myself again. My name is David and I am a graduate of the University of Maryland School of business. So currently we are facing economic conditions that we have not seen since the housing bubble of the late 80's. There are many similarites with a few subtle differences. First, this is the first time in history that instiutions were allowed to leverage there money up to 40x1. This coupled with irresponsible subprime lending/borrowing has only made the situation worse. The market created MBS's(mortgage back securities) in which mortgages were being bought and sold and flipped daily on an unregulated market multipled by leveraging there money 40x1...so once the arms spiked and these shotty loans revealed for what they are, you can see how the downward spiral began. (Basically every1 playing with the house's money and finally bust...but how do u payback money you lost that you dont have and then multiply your losses 40)
So that was just a brief intro as to why 2009 is setting up to be an amazing year for REI. So basically America was facing an econmic collapse because there are 100's of billions of dollars if not trillions locked up in these toxic assests as the result of defaulted loans. As a response to this congress and the President came up with a few programs to address this crisis. 1) $700 billion bailout 2) TARP (Troubled Asset Relief Program) 3)Unilateral worldwide easing of interest rates to resume intra bank lending to ease credit crunch.
Part of the TARP allows the banks that took bailout money to writeoff billions of dollars in toxic assets.
What this means is that basically some of these properties have been written off to a value of $0. So what the program tells us it to put in offers for homes for 30,40, or even %50 off FMV. What I'm saying is do not be afraid to aggessively bid on REO's and to even shoot for 60 or even %70 because the banks do not even know the intrinsic value of the properties they own. As a matter of fact there is no way to know what home values are due to the fact we have been running on an over leveraged economy for the past 10 years. In my opinion the only real value of certain homes can only be accertained by looking up what the homes sold for during the years of 1991-1998.
In conclusion try to find the banks that took tarp money a few off the top of my head are Bank of America, Citi, PNC, Suntrust, Capitol one (Chevy chase bank), BB&T...and many many others
website is this http://www.propublica.org/feature/bailout-bucks-to-banks-1028
So if you see these guys dont be afraid to play hardball cuz if you want to know where the bailout money went you can soon say your pockets