There are many homeowners who are in danger of being foreclosed upon on their homes and the number of foreclosures is only going to continue to increase throughout the rest of 2008 and 2009. The reason why is because of two trends that are linked to one another that is going to simply compound the foreclosure problem.



The first trend is record number of homeowners due to relaxed lending requirements by sub prime lenders and low interest rates over the last five years. Many people who currently own a home either would not have qualified for a loan under traditional lending requirements or would not have qualified for a home at the price they got qualified under.

As a result of these loose lending requirements people who currently own a home are now realizing that they can no longer afford the home any longer. Perhaps they might have suffered a decrease of hours on their job. Maybe they may have lost their job and forced to take a low paying job. Others may have been counting on bonuses from their jobs and these bonuses have been cut back or eliminated due to performance by the company. Whatever the reason is, these homeowners can no longer afford their home.

The second trend is the economic financial recession that is taking place in the United States and other parts of the world. Although the US economy is not in a recession by the technical definition (Real Gross Domestic Product declines for 2 straight quarters), GDP numbers can be revised at a point in the future. Therefore most economists typically don't declare a technical recession until, in many cases, after a recession has already occurred.

All signs point to the fact that we are in an economic recession right now. According to a recent article in Newsweek magazine, ?There has never, in the postwar U.S., been a 1 percentage point increase in unemployment without a recession having been declared, and much of that increase in unemployment occurs after the recession started?? Considering that we are closing in on a 2 percentage point increase, that's a clear sign that we are in a recession.

The foreclosure trend continues to drive higher as a result of the economic recession. When the economy slows down people lose jobs or have less money. Less money means they can't pay their bills and if one of those bills is a mortgage, foreclosure occurs.

The economic recession continues to drive higher as a result of the foreclosure trend. When foreclosures increase it causes a major hindrance on the economy. Foreclosures increase the supply available for real estate, putting price pressure on the values of real estate. This hurts home builders, real estate agents & brokers, mortgage professionals, title company owners, property managers and any type of professional who is tied to the real estate industry.

By starting a foreclosure prevention business you can help limit the amount of foreclosures that occur and continue to drag the economy. While certainly there are a large number of home buyers who got loans they probably should have never qualified for that distracts from the fact that there are many other home buyers who can afford their home and just need help in getting back on track.

How can you tell the difference between a homeowner who can't afford their home vs. a homeowner who experienced a temporary setback? Here are some examples and we'll also show you some solutions as to how you can help these homeowners as well.

One example of a homeowner who you can help is homeowners who have adjustable rate mortgages. These are people who had mortgages that they could afford previously. However, due to the mortgage adjusting to a higher rate, their mortgage is no longer affordable.

Through your foreclosure prevention business you can negotiate with the bank on the homeowners? behalf to do what is known as a loan modification. This is where the lender agrees to change the terms of the loan, usually either the interest rate or the length of the loan (i.e. 30 years to 40 years) to help the borrower be able to make mortgage payments.

What type of knowledge will you need to be able to provide this service for people? You will need to learn how to contact the bank on the client's behalf, get in touch with the loss mitigation department and negotiate with the bank on various options to help the homeowner become current on their mortgage payments.

You will also need to learn how to direct the homeowner to provide the necessary documentation and paperwork that will increase the chances of the bank accepting the loan modification.

The key to getting loan modifications accepted is to be able to clearly demonstrate to the bank that the situation that caused the borrower to fall behind is a temporary situation and a situation that is beyond the borrowers? control. For instance, if the borrower lost his or her job and it took 6 months to find another job, that's an example of a situation that can get a loan modification approved.

With a foreclosure prevention business you can earn anywhere from a couple of hundred dollars a deal all the way up to a couple of thousand dollars a deal. More importantly, this service can also position to acquire deals that you otherwise would not have came across if you only offered buying the property as a solution.