The real estate industry is going nuts. We all see the news, read the horror stories and witness giants such as CITI and Countrywide scramble while their stock prices tumble and tumble and tumble...
Rust Belt city mayors recently met to discuss the mortgage mess. With all of the media hype, government officials are calling for changes. They are calling for help. The question is... will help arrive?
I hope not. Here is why. The mortgage mess is due to a few factors.
1. Lack of Consumer Education. Borrowers were told two things:
-Your credit will improve. This is true IF you embrace responsible spending.
-Your home will appreciate. Long term, this is always true. Short term, there are no guarantees. This is especially true for borrowers who didn't treat their home as an investment.
2. Greed.
-Wall Street was getting rich. Can you imagine 1% of hundreds of billions of dollars? -Brokers. While Wall Street was getting fatter than fat, individual mortgage brokers seized the opportunity to gouge clients on their loans.
-While 1% of hundreds of billions is hard to imagine, a $10,000 profit on a single closing hits a little closer to home.
3. Government -A president who wants to increase home ownership (Great principle, but the means to this end has proven errant).
-Greenspan. The jury is still out, BUT interest rate cuts made unaffordable homes, very affordable (for the time being).
Looking for solutions? Check out the next post.
Showing posts with label Government. Show all posts
Showing posts with label Government. Show all posts
Nov 28, 2007
Solutions....
Heads up... This post doesn't present a warm and fuzzy outlook filled with easy solutions. Most problems aren't solved the easy way.
First of all, let's start with solutions that are flat out wrong.
1 - Wall Street. Just take a peek at Citi & Countrywide stock prices. Tell me how bad any investor wants back in.
2 - Expanded Underwriting.
1. The reason this entire mess exists is a lack of underwriting standards. Essentially, people who do not qualify for loans received them.
Wall Street learned its lesson. It's done.
So should the government jump in and take on all of these bad loans? NO WAY!
I completely agree with the government expanding FHA standards to some extent. For example, people who were never late on their mortgage prior to the rate adjusting deserve to refinance. However, everyone does not deserve to get bailed out!
So what is the answer?
TIME! There is a ton of inventory on the market. There are too many builders. There are too many borrowers who simply can not afford their home. There is a lot of downward pressure on the housing market. We are not in a short term market. It's a buy and hold market.
My advice to you.
Get off of craigslist. Start working with a qualified Realtor. Make them show you some comparable sales. You can get a great deal. Buy the cheapest house in the best neighborhood and reap the rewards!
First of all, let's start with solutions that are flat out wrong.
1 - Wall Street. Just take a peek at Citi & Countrywide stock prices. Tell me how bad any investor wants back in.
2 - Expanded Underwriting.
1. The reason this entire mess exists is a lack of underwriting standards. Essentially, people who do not qualify for loans received them.
Wall Street learned its lesson. It's done.
So should the government jump in and take on all of these bad loans? NO WAY!
I completely agree with the government expanding FHA standards to some extent. For example, people who were never late on their mortgage prior to the rate adjusting deserve to refinance. However, everyone does not deserve to get bailed out!
So what is the answer?
TIME! There is a ton of inventory on the market. There are too many builders. There are too many borrowers who simply can not afford their home. There is a lot of downward pressure on the housing market. We are not in a short term market. It's a buy and hold market.
My advice to you.
Get off of craigslist. Start working with a qualified Realtor. Make them show you some comparable sales. You can get a great deal. Buy the cheapest house in the best neighborhood and reap the rewards!
Jun 29, 2007
Accountability
I'm working on some loans right now for an investor who owns over 15 properties and has been working within the real estate/ development industry for over 20 years. He has never missed a payment. He has over a million dollars in the bank.
His loans were just canned because of the Colorado legislature.
Why??
Foreclosures have been blowing up. The government has to step in to protect its constituents right?
I disagree.
The loans that the lender canned were sophisticated loans that required no income disclosure.
(If you want to know exactly why the no income loan fits borrowers who retain many properties, please contact me. Basically, those who own & rent real estate have an extremely high overhead because the mortgage payments are so high.)
Anyway.... back to the task at hand.
1.) Should mortgage broker's be licensed?
-Absolutely. You, as a consumer, have a right to know that the person handling your mortgage is not a criminal.
2.) Should consumers enter mortgage agreements with caution?
-Yes! If your mortgage broker isn't willing to tell you how much money they are making or let you know that your loan terms are changing minutes before closing, get out! Work with someone who can provide references. Work with someone who deserves your trust and has your prosperity in mind.
3.) Should the legislature determine which loans are acceptible for consumers?
- No! Borrowers need to take responsibility and understand the exact terms of their loan. When I speak with borrowers, the most important question I ask is, "What is your worst case scenario?" I work with investors, first time home buyers and everyone in between. Their needs are different. The loans that fit these needs are different.
The bottom line:
Don't trust anyone with your financial future. Ask the hard questions, understand your worst case scenario. Make wise investments that will build wealth! There will always be scum looking to kill it off of some poor sucker. Work with people who are honest and deserve your trust. Am I the richest loan officer you'll meet? Absolutely not. Will I do everything in my power to help my customers achieve wealth? Yes!
His loans were just canned because of the Colorado legislature.
Why??
Foreclosures have been blowing up. The government has to step in to protect its constituents right?
I disagree.
The loans that the lender canned were sophisticated loans that required no income disclosure.
(If you want to know exactly why the no income loan fits borrowers who retain many properties, please contact me. Basically, those who own & rent real estate have an extremely high overhead because the mortgage payments are so high.)
Anyway.... back to the task at hand.
1.) Should mortgage broker's be licensed?
-Absolutely. You, as a consumer, have a right to know that the person handling your mortgage is not a criminal.
2.) Should consumers enter mortgage agreements with caution?
-Yes! If your mortgage broker isn't willing to tell you how much money they are making or let you know that your loan terms are changing minutes before closing, get out! Work with someone who can provide references. Work with someone who deserves your trust and has your prosperity in mind.
3.) Should the legislature determine which loans are acceptible for consumers?
- No! Borrowers need to take responsibility and understand the exact terms of their loan. When I speak with borrowers, the most important question I ask is, "What is your worst case scenario?" I work with investors, first time home buyers and everyone in between. Their needs are different. The loans that fit these needs are different.
The bottom line:
Don't trust anyone with your financial future. Ask the hard questions, understand your worst case scenario. Make wise investments that will build wealth! There will always be scum looking to kill it off of some poor sucker. Work with people who are honest and deserve your trust. Am I the richest loan officer you'll meet? Absolutely not. Will I do everything in my power to help my customers achieve wealth? Yes!
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