The subprime mortgage crisis was a precursor to the so-called 'Great Recession' that started in 2007.
Many will recall the US property boom that started in the mid-90s and continued for more than 10 years. With hindsight, we now understand that the boom was facilitated by irresponsible lending practices that allowed less-than-qualified borrowers to purchase property. The debt generated by lenders was underwritten by the mistaken belief that capital gains would outweigh otherwise unmanageable debt burdens. However, as interest rates rose in 2005, the market witnessed declines in housing prices, leaving many borrowers unable to keep up with repayments on their mortgages. Defaults began to soar, inventories increased, and prices fell even faster, thus generating a 'crash' of mortgage-backed securities, private sector investment and public sector credit.
As seen in other countries with similar scenarios, the US property market has left lending institutions with crippling debt from non-performing real estate assets. The situation has proved increasingly difficult to resell in a market starved of available credit and oversized inventories. Worse yet, the lenders were further hobbled by capital needed to keep the assets in reasonable repair. In the news media, the assets were nicknamed "toxic assets" because the perception was that nobody wanted the properties.
ACSI believes in America's Real Estate Future.
Distressed asset opportunities with US banks and other lending institutions now exceeds $1 trillion (USD). Many institutions are facing huge potential write-downs; others face a crisis of liquidity as they are unable to either process the current volume of foreclosures and deal with the ballooning inventory of non-performing assets. Generally speaking, lenders are now facing a line in the sand: sell selected assets at ultra-deep discounts with liens (legal claims on a property) removed in order to restore positive cash flow and true profitability.
Borrowing from the old adage, one persons toxic asset is another persons golden opportunity. Five years (plus) after the Great Bubble popped, a unique investment opportunity has emerged. Investors of all ranges (e.g., small cash funds, large equity accounts, institutional) can enter this demand-side marketplace to restore assets and generated significant profits. Prices are still dropping for these assets as the number of cash buyers for these assets are dwindling. This has created a unique environment for investors with cash to make profitable investments in this distressed space.
ACSI purchases properties where the occupant/owner has stopped making payments by offering a reduced cash settlement to the lender.
ACSI will deal with the property occupant. Many lenders are inclined to take cash quickly as they can take the loss quickly and reinvest the proceeds immediately as their money is again generating income eliminating the "write down" process with regulators. ACSI lends money at 50% of the present 2012 deflated value.
ACSI will rents the property immediately and generate cash flow so as not to step into the problems of the lenders.
Find out how you can participate.Executive Summary of Investors
A Clean Slate, Inc (ACSI, traded as DRWN) was established as a buyer of distressed real estate and distressed mortgages. The company will also make hard money loans for residential real estate and small commercial properties. The properties that the company acquires will be rented immediately in order to maintain positive cash flow on all assets.
Why is ACSI in this market?
Toxic Assets is a term created out of the sub prime mortgage crisis, which preceded the worldwide recession that began in 2007. During the US property boom of the middle of the last decade, irresponsible lending facilitated borrowers purchasing property-based debt under the mistaken belief that perpetually increasing real estate values would outweigh otherwise unmanageable debt burdens.
As interest rates began to rise around 2005, the market witnessed a sharp decline in housing prices, leaving many borrowers unable to keep up with payments on their mortgages. Defaults began to soar, with a domino effect on mortgage-backed securities, and private sector investment. The property market in the US consequently collapsed leaving lenders with crippling debt in the form of real estate assets having less value than their mortgage debt. These assets were named "Toxic Assets."
US banks and other lenders now have approximately $1 Trillion in existing and potential write-downs and the majority are in the midst of a liquidity crisis themselves. Lenders and banks are now trying to sell the properties that they now own which came from the bad loans they initiated. Prices are still dropping for these assets as the number of cash buyers for these assets are dwindling. This has created a unique environment for investors with cash to make profitable investments in this distressed space.
ACSI's plan rents the house immediately and generates cash flow so as not to step into the problems of the lenders. ACSI lends money at 50% of the present 2012 deflated value.