Numbers Game

In the view of some loan-modification specialists, halting as many foreclosures as possible is the best way to address the slide in real estate prices, and collateral damage such as reduced property-tax rolls, underfunded schools and destroyed neighborhoods.

Rice, for instance, says when an investor loses a home to foreclosure it hurts two parties — the renter who gets evicted from it and the investor.

He suggests that lenders temporarily reduce installment amounts investor-owners pay. "A permanent change isn't deserved, but a three- to five-year plan would make sense to get payments down to a break-even level (with rents) while we get through this crisis," he said.
Sometimes, getting borrowers to come forward and seek a loan modification can be a problem because they don't want to admit they're in trouble, says Salvatore Buscemi, managing director of Dandrew Capital Partners, a distressed-real-estate investment fund in New York.
Treading Water

Buscemi buys defaulted paper and repossessed properties from lenders. He says he'll negotiate with any owner on a mortgage he holds — an investor or primary resident. But he says investors walk away more often than owner-occupants, as "it doesn't hurt them emotionally."

And now other investors can use the 1% funding provided by the Home Seller Assist program created by John Alexander to purchase these properties and flip them immediately.

Bedard, who has many investor clients, calls aid bias toward owner-occupants unfair. Many investors "just want to work it out to where they're not underwater," he said.
An investor might hold five or 50 homes, he says, so saving those can have more market impact than saving one primary residence.

Investor Jae Kim, with four Arizona homes, is working with Bedard's firm to seek aid. Four months into negotiating with his lenders, he still can't tell if his loans will be modified.
"I think every borrower should be treated the same," he said. "They've all put their hard-earned money in, whether it's for a retirement home, investment or primary home."