It was inevitable, and I am surprised it has not happened before this.  A company in Texas, Econohomes, is buying up foreclosed property, and turning around and selling it to people in need for a price they can afford.  The company is buying these properties for pennies on the dollar, giving it a slight markup, and flipping the home in record time.  Here’s an example - a mother and daughter in Cleveland had purchased a home in 2003, complete with an adjustable ARM.  Payments on this modest home were only $470 on the purchase price of $44.000.  The lenders conveniently forget to tell them about the resets, and the mother and daughter found themselves in a position of not being able to pay the payments on reset.  They lost their home.

The Texas-based Econohome bought that home in September for $7,875, a real value in anyone’s book.  Econohome then resold it to the mother and daughter for $34,000.  And the mother and daughter are back in their home, paying a monthly payment of $400 for the next 15 years.

There are many having a real problem with this.  The premise bandied about today is that this is how the sub prime market was created in the first place, and that Econohome is just making things worse.  I suppose in a way they are, but it surely makes one feel good to know that someone is doing something to help these struggling people out.  It remains to be seen if the company is on the up and up.

Another company has also made inroads into this market.  Destiny Ventures, one of the first in the Cleveland region, now owns title to 3,271 foreclosures.  Econohome has 200 in the Cleveland area alone.

One of the issues cited is that the company is not making needed repairs to the homes before reselling.  There are instances of homes in need of repair that they have brokered, and also concerns that people who are buying into these homes will just walk away when repairs needed get to be so bad they are unlivable.

Certainly, there are two sides to the coin.  From an economic viewpoint, it bears looking at.  From the viewpoint of someone in the street, it is just about the best thing since sliced bread.