The real estate market was just entering an upswing in 2000 and 2001. Prices were rising and the market was strong. Lending guidelines were pretty much as they had been with tight qualifying restrictions. But as the market continued to strengthen banks became greedy...disguising their actions of loosening lending guidelines and offering new loans as an attempt to help people purchase a home but in reality it was just another way to generate revenue. The market went nuts. People were buying homes they could previously never afford and in reality still could not afford but these new loans eased the initial burden by offering low interest rates or no interest loans making in easy to get in over your head. More buyers could suddenly buy and prices reflected this new surge in buying. Sellers were making a bundle as prices soared. But as the saying goes "What goes up must come down" and in 2006 the bottom was looming. The real estate market slowed as buyers started feeling the pinch of higher payments. As the market slowed prices started to fall and many homeowners who were told by their lender to simply refinance when their payments adjusted didn't have that option any longer. Their only option was to sell but so many people were in the same situation suddenly the market was flooded with homes and the few buyers out there could pick choose and dicker. The bubble didn't burst it had a slow leak that started in 2006 and finally will loose all it's air this year (hopefully) Unfortunately because of such a huge number of people finding themselves unable to make higher payments and unable to refi, they have no alternative but to let their home go into foreclosure.
The funny thing about this whole situation is the Banks who are faltering because of their own greed and mismanagement. They gave people loans they couldn't afford and when the realization hit, it's now the banks who are suffering along with the people they were deceptively "Helping to Buy a Home".
I've talked to many homeowners in this situation. Some who aren't behind in payments yet or their loan has not readjusted, but see the writing on the wall and try to take steps to save their home. They contact their lender hoping to negotiate something with their mortgage company that will ease the burden of a much higher payment. But in almost every case the bank simply won't deal with anyone who has not missed a payment. So if you know you payment will be rising above what you can afford and the bank only laughs in your face when you ask for help what are your alternatives? Sell your home as a shortsale? Guess what most banks won't consider approving a short sale unless you are behind in your payments. Do you let your home go into foreclosure? Many people are because they don't realize there is an alternative. But what is the alternative? It's simply buying another home before the readjustment of your current mortgage payment. Take advantage of your GOOD credit before it's ruined by a mortgage company who's only interested in your money. They won't lift a finger to help until they have to so don't be a victim of the mortgage crisis. Come out a winner. Buy another home before it's too late. The banks won't help you so YOU'VE GOT TO HELP YOURSELF!
14 comments:
Everyone has an angle. Will you be returning the commission you received on every transaction where the buyer's could not afford the home? I dealt with your kind when I worked Short Pays/MODS for WFB from 1993-1997. Never heard a human being yell in anger/fear as loud as a RE agent that had to cut their commission on a Short Sale. Might want to inform your "clients" that employers review Credit Reports and they might not take kindly to a F/C walk after a new home purchase.
Take advantage of your GOOD credit before it's ruined by a mortgage company who's only interested in your money.....Uh that would be their money - you borrowed it remember? If you really need to walk - do it! Then Rent. But to take another chunk of "their" money you have so much disdain for before you leave?..please..that's so far over the ethical and moral cliff....
Here's the website for filing a complaint with the DRE. I looked up her license # and pasted into my complaint.
http://www.yourhome.ca.gov/filing-complaint.shtml
Its interesting how people rationalize this. Obviously Banks realized there was an opportunity to make money by lending to people without verification of income or giving them low initial rates, making a mortgage managable for a while then raising interest rates far beyond the norm solely so they can make more money with a refi down the line. So this is OK...completely legit but a borrower caught up in this scenario has little choice but to suffer from a banks greed now when a refi is impossible simply because the bank refuses to help the borrower out. If the banks would simply deal with these people in a decent manner and lower their interest rates back to a reasonable rate then most of these people would simply stay in their home. But the banks won't deal with these people until they are forced to...sounds like greed and certainly immoral but thats ok right? Meanwhile families are displaced because a lender told them the bad loan that was offered them was an easy way to get into a home. The bank knowingly gave them a loan far beyond their means and told them to refi later which the banks won't do now. I'm sorry but your arguement just doesn't hold water. If you are a fan of the banks then so be it but don't condemn people who were taken advantage of for finally seeing the light.
Kathy, you failed to answer the question: Will you be returning the commission you received on every transaction where the buyer's could not afford the home? You are asking the banks to give relief to the borrowers, so how will you help out former customers that you received income on in the past?
Anonymous you don't seem to understand the role of a real estate agent. My job is to find people homes. I don't pre qualify them and I don't give them loans and I never charge a buyer commission. So then it's a mute point. By the way, why don't you leave your name or do you just have keyboard courage but never the backbone to use your name?
Thank you for providing this information. Everything you say makes sense and you explain it very well. This makes it much easier to make a hard decision. Please keep letting people know they have options.
Kathy, you are playing semantics. The seller pays the commissions to the seller's and buyer's agents. The Buyer never does, so you still received the commission it just was seller paid. It does not change the fact that you made money off sales of homes to buyers who could not afford the home after the loan adjusted. If you are pointing at the banks to help the borrowers out then will you not help out those borrowers by returning some of the commissions you made off them buying the homes? You made money off the sale just as the banks did, so what is the difference? I don't need to leave my name - I am not the one selling people on the idea of walking away from their obligations. I bet the neighbors of the people who walk away from their homes accept the fact that it was the bank's fault and that the lower property values from the vacant homes that lowered the property values further were just the result of poor people taking advantage of their good credit and an having an upstanding RE agent looking out for the little guy.
Anonymous,
By the time people talk to me it's no longer a matter of IF they will walk away it's WHEN. They have already talked with their mortgage lender...to no avail. I have no control over their decision, I'm simply pointing out that they don't have to rent for the next few years because lenders told them one thing and then did another.
The opportunity exists to buy a home under certain conditions. I answer their questions and refer them to a CPA or other professional to confirm what I have told them pointing out that every situation is different. Most people considering this drastic step have done their homework and see no other alternative. They turn to me because I don't point an accusing finger or shame them for their decision.
As far as commission goes I earn my commission by selling homes. The lender tells them what they can afford. I am never so presumptious as to tell a buyer they can or can't afford a home THATS THE LENDER'S JOB AND THEY SURE DIDN'T DO A VERY GOOD JOB OF IT.
You are entitled to your opinion and so am I. I'm doing nothing immoral or illegal by giving accurate and valuable information. It's not illegal to let your home go into foreclosure and it's not illegal to buy another home before that happens. In fact this scenario creates a new real estate market. If every person who had no alternative but to let their home go back to the bank only rented the market would be far more overwhelmed with foreclosed homes than it is now, with very few people able to buy. When someone has made the decision to let their home go back to the bank but has the foresight to buy another home before this happens has just provided a bank with one less foreclosure on their hands ( please remember they are letting their home go back to the bank whether they buy or not),
a lender will get a commission and yes I will earn a commission. But more importantly the person who was going to lose their home will not be forced to rent. They will be homeowners with a 30 fixed mortgage where the interest rate never changes and they are paying principle from day one. They can feel good about themselves again and provide a stable environment for their family. People make mistakes but doen't crucify them because they chose to believe what their lender told them.
By the way you can't tell me when these people sit down with a lender to qualify for a new mortgage the lender doesn't atleast suspect this may be the eventual outcome, and yet they still give them a new mortgage.
People don't want their home to be foreclosed, it's a devasting ordeal. But many people will be forced into this situation because banks just won't help them out.
Kathy,
You are giving terrible self-serving advice.
If the homeowner cannot afford their current mortgage then there is no way that borrower will be able to purchase a new house on affordable terms. This will only draw out an already painful process but solve none of the underlying problems.
If the homeowner can afford their current mortgage and walks away into another cheaper house are you going to be there and help out when the original lender comes a knocking? Because a lender probably isn't going to haul a walk-away into court if it seems that the borrower really coulddn't afford the mortgage payments but can you be so confident that a lender won't just want to check to just make sure that the walk-away didn't just ignore a contract that he/she could actually afford? Are you willing to guarantee that, Kathy? Otherwise, YOU ARE GIVING TERRIBLE ADVICE.
Kathy-
Wow. For a realtor,you are a very refreshing source of RE info! You've restored my faith that there *might* be one or two honest realtors left in this country- thankyou.
1) It's not against the law or "unethical" to go into foreclosure.
2) The lenders KNEW they were siging up potential "foreclosurees" when they made these loans.
3) As long as the market was rising, it was profitable for lenders to ensure foreclosure because said lender could just put the house back on the market, sell for a profit and collect new, bigger fees on a new loan.
4) Average Americans were USED by lenders, banks, Wall Street securitizers and government loan programs and GSE's during this whole episode.
5) Now that you've been used on the way up, the same parties will use you on the way down: Taxpayer bailouts of the Wall Street firms that enabled the problems.
(See the pathetic Senate hearings with the Federal Reserve, Treasury Dept. etc.- today!- with regard to Bear Sterns- that's a 30 billion dollar taxpayer bailout of incompetent, corrupt companies who CAUSED this whole mess).
There IS a breakdown of ethics occuring here. But the screwed average American is by far the less guilty of the two parties.
So walk and rent and wait for the market to fall before buying back in, OR buy a new house and then walk on the old.
If you choose the second alternative, just make sure youy drive a hard bargain and do not buy over 2 - 3 X income, with a fixed rate that you can EASILY afford on a monthly basis, come what may (job loss, etc.).
Thanks again Kathy. I have never walked on a home and never would (too smart to get a loan I can't afford, no matter WHAT some lender tells me, LOL). But I can sympathize with people who naively bought into this trash market. Walk- once!- and LEARN FROM YOUR MISTAKES!!! Good luck all!
Some who aren't behind in payments yet or their loan has not readjusted, but see the writing on the wall and try to take steps to save their home.
Minor point: It's not their home. It's the bank's and their home until the loan is fully paid off.
I think it would be good to remember that everyone has a different situation and a different lender. I stumbled onto this site because I am looking for help. What about me? I bought at the peak of the market, and HAD to use my lender, (the servicer from my previously SOLD loan on my old house) otherwise pay a prepay I didn't sign up for. So I use the new lender, and end up sitting in the escrow closing office with a TILA that was different from the original agreed upon one. My family has NO WHERE to live, so I sign because I HAVE to. The man on the other end of the conference call says I can refi in 1 year because the prepay will be reduced to that. He neglects to inform me, at that time, that my option arm is a neg am, and I get forced into signing so my family has somewhere to live. I KNOW I took a gamble on the refi thing, BUT I had no choice. Where am I now? I owe 200K over what this house would sell at now. Because the interest rate has adjusted, I am 2K in the hole more every month. My lender won't modify me to a fixed because "they don't have that "product". When exactly will I catch up? When will I feel like putting another dime into this house is worth it? DON'T tell me to sue my lender for fraud, I don't have that kind of time. I am not late currently, but it's coming and fast. I am not a poor person by any means, I have excellent credit and make well into the 6 figure range. It would be nice to maintain my credit rating, but the bank STOLE it from me. My story is unique, but still, for a moment can you see that everyone has different things they are facing? Kathy, I hope you continue to give out info. Knowledge is power, and it is high time that someone starts exposing the true criminals in this mess. Carry on!
Remember people you have to do whatever it takes to avoid a fate worse than death!
The ultimate humiliation!
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RENTING!
Sheesh. It's not so bad. Really, come on down. All I ask for is one month up front and a clean credit report....... oh wait.
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