Margie OCampo de Castillo

In a perfect world, industry solutions would be created, or at least vetted, by industry experts and practitioners. I believe we can all safely assume that anything to the contrary is a complete waste of resources! I still have not gotten my arms around the one where we so generously gave tax money to failed banks with no strings attached and a mere suggestion they help homeowners in hardship with temporary modifications. Come again? Oh, they’re going to cure this financial crisis from the top on down. This one is giving lots of folks, including me, a major case of heartburn. What about the monies given to states and cities? The whole purpose of this money, or so we were told, was to help first time buyers purchase a home and reduce the inventory of foreclosed homes. Well, the way one program in our state works; the buyer is given 22% of the price of the home as a silent second. After owning the property for a predetermined time, the 22% does not have to be repaid. OK, that sounds good so far. But here is where I have trouble understanding the rationale behind the guidelines. First, the Buyer must find a Seller willing to sell the home for 5% below the appraised value vs. accepting a higher than list price cash offer from an investor who can close in weeks vs. in 60 +/- days. (this is a perfect segue for another pet peeve of mine….why aren’t banks required to give first time buyers first shot at foreclosed homes? After 90 days on the market, First Time Buyer Exclusivity would be removed…. But that’s a 10 page grievance, so we’ll leave it alone for now….but I’m sure you get the gist of it.) Let’s say the home is around $125K. The Buyer has to put 3.5% of his own money down ($4,375). If the Seller isn’t jumping for joy at the idea of giving the buyer more money to help pay closing costs and prepaids, the buyer has to have at least another 3.5% to cover those costs, ($4,375) along with 2 months of reserves, ($450). Now I don’t know about you, but not even before the economy fell off a cliff did I come across many first time buyers with $10,000 saved up to buy a house. So I’m going to go out on a limb and say that the successful first time buyer programs I know of offer loan worthy buyers a 30 year fixed rate at or mostly below market. They typically include down payment assistance with a required financial literacy class. But I guess that model was just way too uncomplicated and mundane. So the question begging to be asked….what percentage of first time buyers are we targeting to help here? Are we throwing money at people who DON’T need the help….? You be the judge.

In a perfect world the folks in Washington would be writing a bailout plan that REQUIRED banks to lower and fix adjustable rates and renegotiate mortgages so the homeowner could avoid losing their home. If the Banks don’t want to write all the loans off they could put a silent second that provides for the bank to be paid back the silent second if & when the homeowner sells and has proceeds over and above the silent second. This model would not work for everyone facing foreclosure, so other homeowners, the banks could do a five year lease with option to buy. Think of the positive impact this would have on neighborhoods facing the blight and crime of abandoned homes today! Instead we have the very picture of lifeguards rescuing the sharks while people are left bleeding and dying in the water. Doesn’t this “hurry up and approve this Emergency Bailout” rhetoric remind you of the “we must go to war because there are weapons of mass destruction...” line we fell for? If this bailout plan passes know for certain that “We the People”, have been sold out! As individuals we can never compete with the deep campaign contributing pockets of the special interest groups, but come time to vote we can sound out and clean house. The sell-outs will no doubt stand out notably and we should not forget who they are. Let's take our privilege to vote and seriously consider replacing the old guard with folks who respect and hold sacred their pledge to serve "We the People".

EZ Money I wonder what would happen if turning 16 was the ONLY requirement for obtaining a Driver’s License. Forget having to learn anything about the laws and rules of driving safely, just go head on and drive away the minute you turned 16. Seems ridiculous but that’s how I interpret the EZ Money loans that were freely handed out and are just now being scrutinized after being hit by the foreclosure tsunamis and the onslaught of wrecked lives, families and financial institutions in their trails. Maybe there was a reason our forefathers felt so strongly in not giving a child everything, lest it grow up to appreciate nothing. You think? EZ Money loans: Considering that other countries require a hefty down payment to obtain a loan which comes with a similarly hefty interest rate, we Americans have not begun to appreciate and value the types of loans we have been afforded. When I began my real estate career in the early 80’s, lenders required a down payment and full documentation. Back then the EZ Money loan was a full doc FHA 3% down. A loan product created to help increase homeownership and the middle class. Compare that to the subprime loans responsible for the birth of the MEGA disaster now shaking the economy on a global level! If increasing homeownership and the middle class was the reason, the solution was extremely reckless. It is fair to say that the EZ Money solution was worse than the problem it tried to solve in the first place. What happened to the value and priority folks placed on homeownership? The EZ Credit and EZ Money mentality blinded our country with excess and dulled what little common sense we had to begin with. Our forefathers believed in budgeting and saving up for things that were truly necessary, while our generation places little value on the basic needs and carelessly spends money we do not have on mere luxuries to impress and keep up with what we see on TV. I am in the American Dream business, but as a REALTOR® I am the first to say that EZ Money and EZ Credit loans are not the way. We need to increase homeownership responsibly and financial literacy education is paramount. In a perfect world it would be taught in schools, but the main responsibility falls on us to teach those around us, starting with our children. What good is handing out loans for the privilege of homeownership if the recipient does not comprehend its value? EZ come, EZ go.