Real Estate Property Investors Default On Home Loans (2)

The MBA defines defaults as loans that are 90 days or more past due or
in the foreclosure process, but not those already taken over by
lenders.

Many home builders say they tried to rein in sales to investors. Dom
Cecere, chief financial officer of KB Home, a major national home
builder based in Los Angeles, said his company used contractual
clauses barring home owners from renting out their properties, but
many investors bought anyway. "People do infiltrate whether you like
it or not,'' he said.

Thanks to easy lending standards, many investors were able to get
mortgages even though they put down deposits of as little as 2% to 3%
on homes that weren't yet built. Some watched gleefully as a rising
market boosted the value by 5% or 10% before the home was ready for
occupancy. "For a while it went their way, they bought two or three
homes and continued to roll the dice,'' said Mr. Cecere. "But that
goes the other way when the prices go down.''

In the end, some investors may have made money by flipping a series of
houses, and lost out only on their last investment, which they
couldn't sell before the market collapsed.