My New Blog

I've been outraged for years now at the irresponsible lending practices and lender deceptions that have finally brought our economy to a halt. When buyers couldn't come up with a down payment for their home, the lenders came up with zero down programs. When the buyers credit was "bruised", (the real word is BAD), the Lender lowered the credit scores. Buyer's have a bankruptcy...no problem...we'll reduce the number of years you have to wait to get your credit straight. Buyer's have 40-50% debt and can't verify their income...no problem...we'll qualify them on a non conforming program and package them to unsuspecting investors. Whoever wanted a home could get a home. 

There was virtually no regulation on the Mortgage Broker's doing these high risk loans. Many of these brokers and their reps. worked online or out of their homes. Traditional Banks and Mortgage Companies wouldn't touch these loans. They took the bad loans and made them look good, and collected 1-2% of the mortgage amount from each buyer at closing. All they had to do is package the loan and make sure it met the investors guidelines. They manipulated most of the bad loans and made them look good by changing the information the buyer's gave them in some cases. Increasing their income and decreasing their debt, funding down payments outside of closing through "side" deals. The secondary market didn't care because they were packaging thousands of bad loans together and selling them for record profits. As long as the money flowed in the investors didn't care either...they were making too much money to know they had bought bad loans. When the loans started to default in record numbers...everybody started to see the problem.

This was done Commercially as well. Builders, Developers, Investors, and others created wealth through buying properties and land they couldn't pay off unless appreciation kept up at record pace. When it all stopped they couldn't make their payments. Home & Land speculators have accounted for a large part of this fiasco. We're not through the worst of it with Land yet. Many of the large parcels sold are just now starting to be defaulted on, as Builders and Developers can't afford to carry land and new home sales are at record lows.

The recent 750 Billion Dollar Bail out plan blames the real estate homeowner in great part for this predicament. It also benefits the nine or ten large banks left in America who played a pivotal part in this mess. No plan has been devised to assist the homeowners who are currently or soon to be in default. This is a major flaw in the plan and needs to be changed. Interest rates have risen an average of 3/4% in the last three weeks. We hit 7.0% just last week.This is causing an even greater strain on the homeowners who have variable rate mortgages. 

Stricter guidelines need to implemented on all Mortgage Lenders. I think they all need to be licensed within the State they practice. I think they need to restrict the mom & pop lenders who prey on the ignorant buyers and have little or no accountability for thier actions. We need to penalize unethical practices and lending violations vigorously. Proper disclosures need to be provided to Buyers, and uniform buyer guidelines need to be adopted by all Lenders.

It might be helpful if we all just buy what we can afford too! 

Enjoy your best day!

Jeff