What happened in real estate is 'criminal'
Letters to the Editor
By Inman News, Friday, November 21, 2008.Re: 'Sales, prices, builder confidence slide' (Nov. 19)
Dear Editor:
Real estate is the hub of our economy. Everyone and everything is affected by the highs and lows. When government and banks intervened and gave mortgages to anyone who was breathing, that was the biggest mistake.
Being a licensed New Jersey Realtor for more than 30 years, I have seen many ups and downs in the market -- even interest rates as high as 18 percent.
Believe it or not, we sold houses during that time. The catch: Most buyers had either 10 percent or 20 percent down of their "own" money, had a good work background, and their income was within the limits allowed by banks to lend money.
If people do not work, do not save and do not pay their bills, how can we expect them to pay down a mortgage? But guess what? In recent years they got loans and they moved into homes that they couldn't even make the first payment on. What has happened in the real estate market is criminal. There are no ethics and nobody cares. It's left for the next person to worry about and we are left with empty homes and unpaid debt to the tune of billions of dollars.
It is the American Dream to own a home, but one must save to accomplish that. It cannot be a giveaway and left for others to pay for bad debts that should not have been given in the first place.
Helen Lehen
Broker, salesperson
Lesher Associates
Atlantic Highlands, N.J.
***
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Submitted by Bill Fooks on November 21, 2008 - 2:58am.
Bill Fooks
TFT realty Marketing Service
Warwick, RI
As you can see when you don't earn it you don't appreciate it.
The congress encouraged this to buy votes. Now they are trying to buy votes in other areas.
When ever you try to influence tha market conditions with Government edicts,or money, you will always find failure is rewarded more than hard work or good sound thinking.
Socialism is not the solution. You watch, this new congress is going to pass laws that will make your head spin on the way to socialistic society, and true stagnation of the majority of industries and services.
When this doesn't work, they will have price controls.
When this fails they will make more laws to reward the lazy. Its easy to buy their votes, when voters lack education on how the system works, for the benefit of everyone, not just them.
But the schools don't teach this. The government blame the rich, yet they themselves become the rich by being bought off by those they blame.
Don't be fooled by their words look at there actions.
we can srill win but it is an uphill battle.
Submitted by Emmanuel Scanlan on November 21, 2008 - 5:27am.
Many years ago when I purchased my first home the RE Agent performed a simple "qualification" process to see how much home we could afford. Yes, it was simple math using rough figures. It also included other "future possibility" factors that could negatively impact our ability to keep the home in rough spots, such as we are now in. When she was finished she created a price range of homes for us to look at. At no time did she ever show us even a listing for a home that was out of our sustainable price range!! It took a little longer to find a home. It took our RE Agent a little longer, and more effort, to make her commission. When we finally bought our home everyone was satisfied. The RE Agent knew that if we ever were able to sell and buy another that we would be back to her. She also knew she did the right thing and prevented a homebuyer from getting in above their heads.
So what happened to those days???
Today we have a lot of people upside down on their homes. Many bought using these various junk mortgage programs (ARM's, etc.) and many bought above their heads. Yes, the mortgage industry, Appraisal Industry and Inspection industry all can be blamed for contributing to the issue.
But what about the Realtors?? Do you hold yourself blameless for not contributing to the issues today? Was the biggest mistake really giving "mortgages to anyone who was breathing"? It was certainly a big mistake. But what happened to the way it used to be (see above)?
Submitted by John Rakoci on November 21, 2008 - 6:12am.
People always forget history or think 'it will be different this time'. There is less personal and corporate responsibility now. The socialistic path we are about to embark on will require more hard lessons in the future.
Submitted by Robert A. Hulme on November 21, 2008 - 6:25am.
Obviously we have made many mistakes to get us in the position that we are in today. You can point the finger at various individuals who have become party to this crime, but in all reality we must look at what has happened and keep our eye focused on returning back to the way Emmanuel purchased his first home. We all need to go back to the basics or fundamentals of home buying. We save until we are able to purchase, purchase what we can afford in the forseeable future. Realtors need to return to being the Professionals that we should be. Hopefully we can all see the light and help the American Dream become a reality again.
Robert A. Hulme
Realtor, GRI, e-PRO
Prudential Utah Real Estate
robert@RobertHulme.com
www.UtahCountyRealEstate.us
www.UtahCountyHomes.ws
Blog : www.UtahHomes.ws
801-885-2586
Submitted by Candace Pinaud on November 21, 2008 - 6:46am.
My take on this whole mess is there are A LOT of people who are responsible:
1. The government for degregulating the mortgage/lending industry and allowing investment banks to create goofy investments; mortgage backed securities.
2. The banks for selling those goofy mortgage products and not thinking things through well enough: read: profit before ethics.
3. a Few mortgage brokers who had no understanding of these goofy products who sold them out of ignorance.
4. Another few bad brokers who knew exactly what they were selling and preyed on anyone not savvy enough to know they were getting dupped.
5. and, lastly, and MOST importantly....THE CONSUMER!!! I don't know how it is that the PERSON who BOUGHT the home keeps walking away without ANY responsibility for this mess?????
I know I didn't buy a home outside of my means and I put down a down payment and I have good credit and a job - even though it is in the mortgage industry ;-).
A young couple with no kids and Masters Degrees and jobs making $60+/year KNOW what they are doing when it comes to making purchases on investments.
They KNOW how to educate themselves and aks questions.
Those people CHOSE ridiculously priced homes out of their comfort level, they CHOSE not to put any money down - even if they had it - and they CHOSE interest only & ARM loans (I can tell you the couple of those I sold the borrower knew what they wanted and I wasn't able to change their mind).
If we do not hold the folks who MADE these unwise investments accountable as well as all others who had a hand in it - well then - this economy will NEVER change for the better.
We will still be 'blaming others' for things we contributed to.
Environmentally Responsible Mortgages - Paper-Free for Two years and Running!
Candace B. Pinaud
Leave No Stone Mortgage Lending
a division of Ann Arbor Mortgage Company, LLC.
www.LeaveNoStone.com
734.476.3366
734.661.0379 Fax
22 E. Cross S
Submitted by Peter Toner on November 21, 2008 - 8:27am.
Was it easy borrowing, lenders lax or nearly non-existant criterior, borrowers greed or the sub prime crisis that were the main factor in the current state of affairs?
I believe it was a combination of all of these factors that led to todays San Diego housing market.
The final straw came in August 2007 when lenders dramatically tightened their lending criterior (gosh - buyers actually have to qualify?) precluding possibly as many as 50% of San Diego buyers at that time.
Take that many potential buyers out of the picture in one foul swoop and no wonder San Diego home prices have fallen so dramatically.
It’s the outlying areas of San Diego County that has been suffering the most with prices falling as much as 40 to 50% (San Marcos, Chula Vista, Oceanside as examples).
Peter Toner
Prudential California Realty
www.SanDiegoRealEstateAgent.com
www.Foreclosed-SanDiego.com
858 551-3311
Submitted by Mike Parker on November 21, 2008 - 9:29am.
Mike Parker
mparker@theblackwatercg.com
Do you remember when Japanese companies were buying up American landmarks like Rockerfeller Center? When the capitalized value of Nippon Telephone Stock was supposedly worth more than the S&P 400? When a square foot of Tokyo real estate was worth more than a block of Manhattan Real Estate? No? It was in the seventies and it was unsustainable because it did not pass the reality test.
I said then that a day of reckoning would come because none of those supposed "values" were true.
So it is today. Houses are not worth the prices they reached in 2006 and people cannot afford them at those ridiculous prices. Granting a $727,000 mortgage to a strawberry picker from Bakersfield (true story) with no money down is not reality.
Japan paid with a lost decade: the 90's. Deflation ran rampant, millions of jobs were lost, the currency fell and the banks turned out to have 40% non-performing loans.
Sound familiar?
There's too many guilty parties to even begin to think about. What we need to do now is to accept reality: the party is over; houses deserve to sell for whatever the market will price them at, and one must have money to put down, a good job that assures repayment of mortgage responsibilities, and be an owner occupier. The problem will then fix itself.
Now if we could only get our incompetent government to fund banks to make loans.....
Submitted by Timothy Countryman on November 21, 2008 - 9:54am.
This is a waterfall of failed economics. Ignoring grade school principals has lead to the situation we find ourselves in today. When new money enters the system it creates inflation.
Rather than accepting that the noble intention of putting everyone in their own home had created an economic stress, by inflating the housing market, the answer was to pour in more money to compensate. The more people were priced out of the market, the answer continued to be forcing more money into the system. Banks didn't decided adopt risky lending practices out of stupidity, they were strong armed into it by government policies.
And everyone wants to point a finger at someone else. But if you look at the direction of the pointing, you will see a trend. The consumers point to the banks. The banks point to Congressional policy. Congress seems to be the only one pointing in any other direction. They tell us to look at the Presidential Administration, and at the banks that will not modify their loans, and at auto maker exec's for flying to Washington in private jets to ask for money because the banks no longer have it available to lend them.
We do not tend to elect economists to Congress. Yet we entrust them to set our economic policies, figure out what they did wrong, find a way to adjust, and to do it in such a way as to not cost themselves votes. The result is the crisis we find ourselves in today.
Submitted by Bruce Hahn on November 21, 2008 - 9:59am.
American Homeowners Grassroots Alliance
Many consumers are like some small business owners: overly optimistic and financially naive in many cases. That's why lenders are supposed to apply sound underwriting principles when either one applies for a loan. Now we're stuck with the result of what happens when lenders abandon the underwriting process. Innocent homeowners who have had nothing to do with subprime loans have seen their home's values plummet, as have innocent investors of financial services company stock and securities.
Yes, there's plenty of blame to spread around, but let's reserve the bulk of the blame for the lenders who should have prevented the problem in the first place and the regulators who had the tools to stop or mitigate the problem, but didn't use them.
Submitted by Candace Pinaud on November 21, 2008 - 10:47am.
I think there is a lot of confusion about what an actual subprime mortgage is and jus thow few of those are actually in foreclosure.
Back in the day you could do a stated income or no documentation loan with a conventional mortgage with an aggressive 30 year fixed rate mortgage at 6% or lower with no points.
Those people are ALSO in foreclosure. so are the people who closed with an ARM loan YET ALL Arm loans based on LIBOR or The TBill have adjusted to a rate LOWER than what they originally had - yet they too are in foreclosure.
There really is a place for a proper subprime loan. For example; a self-employed business owner who has several businesses under sole proprietorships, partnerships and S-Corps and also owns commercial and residential properties - has lots of income - but the amount of energy and time and documentation it takes to show all of the income is not worth it as the borrower has enough in liquid assets to buy the home he is buying and an 800 credit score and putting down 30%.
In this case, a sub prime mortgage with a stated income (matching his AGI on tax returns) can be used in place of gathering all of the documentation to 'prove' it.
THIS is what a subprime mortgage was created for and remains a good product.
Let's not get 'predatory lending' confused with subprime lending. They are NOT synonymous - they were just abused that way over the last few years.
Environmentally Responsible Mortgages - Paper-Free for Two years and Running!
Candace B. Pinaud
Leave No Stone Mortgage Lending
a division of Ann Arbor Mortgage Company, LLC.
www.LeaveNoStone.com
734.476.3366
734.661.0379 Fax
22 E. Cross S