The recorded telephone offers have started. They tell me not to rely on my bank for information about mortgage loans. They urge me to call now to learn how a foreclosure drama can be turned into a happy-ending bonanza. Welcome to capitalism, where no downturn goes unturned when looking for an upturn.

Fair enough. Our economy runs in cycles, or if you prefer, hills and valleys. There is now money to be made after so much has been lost. There are buyers out there, investors, who may see the home you just lost as a diamond in the rough. It’s no different that a “fire” or bargain basement sale at your local department store: Cut-rate prices on quality items available for a short time only.

Except there is a difference between real estate and a department store: You didn’t have someone rip the shirt off your back so that it could be sold for pennies on the dollar. You didn’t watch as shoppers picked through your former wardrobe hoping to find “a steal.”

For those who can afford to buy now, the real estate market must look pretty good. It’s a buyers market, unlike the runaway train that surged past the 20th Century into this new realm, pushing prices higher and higher and out of reach. For those who can buy, someone’s downturn is a potential upturn.

If you lost a home or real estate of any kind in this debacle, I wouldn’t blame you for being angry or hurt. Someone is feeding on your misfortune.

But there are other ways to treat yourself to the same kind of “bargain” opportunity. No, not in real estate. That requires a lot of money, a banker who will work with you and nerves of steel. There are bargains now for a mere $300 or $400 that may grow in value. You can’t live in them. Nor would you want to. You can, however, use them to learn important lessons about seeking value in the rubble of disaster. Or, in the case of the real estate market, preparing yourself to catch and hold what falls from the sky when the bubble bursts.

Right now the U.S. Treasury bond is as overpriced as many American homes were before someone let loose the subprime snake. The bond price has skyrocketed for a variety of reasons. But it can’t stay up there forever. It will fall, just as the housing market has and is falling. The difference between bonds and real estate is this: when buying a home, you wait for price to fall; when trading put options on U.S. Treasury bonds you buy at a bargain before the fall, because when that market collapses the options will expand in value very quickly. That’s what I call a mortgage liberator.

Are there risks? Yes, there are. The Commodity Futures Trading Commission (CFTC) demands that these risks be disclosed before you trade. Does that sound different from the real estate and credit markets? Not that you have money to lose. Let’s stop the bleeding. But you can think and you can learn hard lessons from the housing market downturn.

That’s why learning to exploit moves in the U.S. Treasury bond options market is so important. Your new knowledge can lead to your rebound. First, you’ll realize there is a way to hedge your real estate holdings and adjustable-rate mortgages against rising interest rates. And, second, you’ll learn what all wealthy people know: you can make money when markets rise as well as when they fall.

This is no time to turn your back on a bargain. Get involved. Learn something new. Exploit your rights as a citizen of this free land. Prosper again.

Copyright 2008

Douglas Glenn Clark is the author of A Mortgage Liberator Guidebook: How to pay your bills as interest rates change. Learn more about his books at http://www.dgclarkgroup.com/portfolio.htm For free U.S. Treasury bond information visit his blog: http://www.afterthenoise.blogspot.com

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