Brooks Conkle

As you may have heard recently, Fannie Mae will not buy loans that have any redemption period after a foreclosure. You can read the announcement here.

In Alabama, the right of redemption period is 1 year. But there is no point for Fannie Mae not to buy these loans, because a foreclosure bond can be purchased which protects the lender in the event that someone came back to redeem the property. Very few actually redeem, and if it happens it happens very quickly. I found a few resources that show the foreclosure redemption periods in each of our 50 states. Source1 and Source2. They actually have conflicting information, but either way, there are not many states with a redemption period of 365 years.

Now, for the history lesson of Alabama. Post Civil War, lots of loans were given for rebuilding. But the banks were allowed to call a loan at any time they wanted (known as a demand loan) with a 30 day notice. It didn't matter whether the borrower was behind on their mortgage or not. This posed a problem, as it could be difficult to find new financing if the bank that lent to money needed it back. This led to carpetbaggers swooping in and buying foreclosed properties on called loans that were worth significantly more than the amount that the bank called. All this happened because the owner didn't have enough time to refinance.

So Alabama (and obviously others) made a law to allow a person to redeem their property if the bank foreclosed on them and took it back. Well, a federal law was eventually passed which stopped banks for being able to demand mortgage loans be returned unless the borrower was in default. Well, Alabama didn't get the memo. We never repealed (or at least amended) this law. So we have an aged law on the books that needs to be scrapped -- or at least the amount of redemption time shortened. If not, it could have a huge affect on the real estate market in Alabama.

Many things are happening in the Mobile, AL that have me concluding that now is a great time to be buying properties. Obviously it's a buyer's market. Simple supply and demand. For investors, rentals are the way to go until the market picks back up in order to do flips to retail people. People that currently can not get financing need a place to live and it's up to investors to help this problem. If your rentals have positive cash flows then you can wait until the market swings back into the favor of the seller -- then the choice is yours -- sell and put money in a new rehab or continue earning passive income. I've got a local website I've started that will grow into the premier listing site for Mobile, AL investment deals.

Here are some positives I see currently for Mobile, AL.

1) There are talks of interest rates going to as low as 4.5%

2) There are approximately 3,500 workers moving to our area in March that are employees of ThyssenKrupp Steel

(If all of these people bought a home, theoretically, all of Mobile's current inventory would be sold)

3) People that can't get financing for homes have to live somewhere. They will rent from someone. Is it you?

If you are an investor, want to be an investor, or deal with investors as clients, you can network in Mobile through the local PMIC (Property Marketing and Investment Club). Even just by joining the website you can stay in the loop with deals and network with others in the real estate industry here locally.

Here's a link.

Happy Investing