If you want to mark the moment when real estate morphed from every American's dream investment into every American's nightmare, try the third quarter of 2007. That's when the foreclosure rate, which had been slowly creeping upward for three decades and was flat all spring, suddenly leaped 32%, from .59% to .78% of all mortgages. Most were surprised, but as always, a few saw it coming-among them, Rob Friedman and Jeffrey Frieden, co-founders of Real Estate Disposition Corp. (REDC) of Irvine, Calif., the nation's largest foreclosure auction house. Launched during the last real estate downturn in 1990, REDC focused on its other activities, like land auctions, during the boom years. Then, in late 2006, Friedman got a call from some former clients at Bear Stearns who were tracking early signs of acute distress in the housing market. A new wave of foreclosures was about to crash.
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