What is the worst case scenario?
Of course, no one can predict how predict the future of the housing market, but the “worst case” we talk about in the mortgage investment world is: the foreclosure process. Simply, when a borrower stops paying and forces the Lender to pursue a legal cause of action against that Borrower to make the Lender whole. The bottom line on foreclosure is that you will be without your monthly payment until the foreclosure is otherwise resolved; however, this does not mean that you forfeit your right to payments owed. In some cases, a foreclosure can be resolved when the Borrower pays you all past-due payments plus default interest (generally, ~18.00%) and attorney fees and costs in a lump sum. This is called reinstatement when the borrowers bring the mortgage current”.
