Too Important for a Comment

I thought about posting this as a comment but knew many people would never see it. Yes I rant and rave a bit about the banks taking advantage of unknowing and naive buyers. I feel strongly about the buyers who were too intimidated to ask questions or didn't understand all the ramifications of the loan they were getting and the so called solution of a refi (namely an appraisal and value). Although I feel for these people and want to help them I also realize that many many people knew exactly what they were getting into when they took out these loans. These people I have no sympathy for. They got what they deserved. However, that does not eliminate the honest hard working people who got the shaft from a lender.

Many of you question a Realtors part in this fiasco. There is no denying we make our living helping people buy and sell homes. But there is no way we can create the kind of market we just experienced. The only reason that market came about was because of the easy money available. Anyone could get a loan and everyone did. Some got bad loans while others got good loans with down payments and fixed rates. But now even these people are suffering the consequences of falling prices and an abundance of foreclosures littering the streets. Everyone one is a victim both good and bad.

I would like to point out one very big factor that no one has hit upon yet. That is the role of the new home builder and their lender. Here in Southern California, the crux of the situation started with new home builders offering these loans along with just about every incentive imaginable to entice buyers to buy with as one person wrote "exploding ARMS" and interest only loans; No money down, a bad loan and here are your keys. New housing communities are the hardest hit here is Southern California simply because the builders and their lenders ( Countrywide) ruled the roost...everyone wanted to buy. They didn't co op with agents so we had no part of new homes, their profits and their rising prices and convenient lack of inventory...another reason home prices soared.

There is no one person to blame nor is there any one institution that can except the brunt of the responsibility. This market is the natural progression of real estate made worse by easy money. Now that the financial sector has corrected the way in which it lends, people once again must qualify, proving income and providing documentation. Anyone who buys a home now will truly be able to afford it.

Should some people get a second chance? In my opinion yes. I respect everyone's opinion and I expect respect in return. Thank you for taking the time to comment and hopefully these comments will make a difficult decision easier for many borrows facing todays very real foreclosure problems.

What Goes Up Must Come Down

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!