The mortgae mess is really starting to hurt the market and it looks like the economy as well. I cannot believe we have gotten ourselves into this mess! Americans seem to want instant gratification more than ever and seem compelled to to have it all now. Stupidity and greed are the two reasons why everything is in the mess it is. Stupidity on the part of the borrowers who thought they could buy something they couldn't even afford in the first place! If you were unable to even conceive of the idea of making that big of a payment at the time you bought the house, why in God's name did you think you would be in a better position in two or three years, especially after seeing how much the interest rate went up? If you are buying a new, big house, chances are you are also going to be buying new, big things to go inside of it. A lot of the borrowers were the younger crowd who lived in nice homes while growing up and thought "Hhhmmm, I want to stay in a nice big home like Mom and Dad's." Look where it got them. They also showed stupidity in not reading the fine print and having someone explain the loan to them and how it works. The old adage of "if it sounds to good to be true, it probably is" applies to this big time. If you are making $50,000 a year and buying a half million dollar home, wake up; there is no way you are going to be able to afford that. The buyers were greedy to have it all now and the sub prime lenders where even greedier. They saw the young, the green, the people with poor credit and approved them anyway because they made their money when the deal closed. They've got their money in hand so they could care less where things are now.
Yeah, the government is toying with the idea to step in. The government, folks. Ever go to the post office and see how inept they are there? That is just letters and packages; you want the government involved in bail outs of mortgages? What ever happended to personal responsibilty? Why should you and I work our butts off to make our house payments and then help someone who was stupid and greedy make theirs? I hate that people are losing their homes, believe me, but it is not my job to give a handout. Plus, if the government steps in it will screw the rest of us when we go to buy. Lenders are going to drastically tighten up to combat the losses they have taken and will take iwhen Uncle Sam steps in. That makes it harder on people like you and I who have good credit, cherish good credit, and work hard to have what we can afford.
Foreclosure is not good for the family affected by it, who are displayed, have their credit ruined and have to basically start over. I hate it for them. But it was their decision and no one put a gun to their head to get the loan. If they were scratching by paying rent...well, that should have been a heads up for them.
Foreclosure hurts us all, not only the economy and our future home loans but the value of our property as well. Drive through any subdivision who has several foreclosed homes currently on the market. The yards are typically unkempt, unmowed and the property is pretty much wrecked inside. That hurts the properties around it. And banks are desperate to move those houses so they cut the prices and still will take an offer much lower than the asking price, thus hurting the comps for the subdivision and those who have their homes on the market that aren't in foreclsoure. When appraisals from the buyer's bank come in the prices are typically going to be low and the seller either has to bite the bullet and except or turn it down and hope things go up in 6-9 months. In other words, innocent people are putting their lives on hold because of someone else's stupidity and greed. Foreclosed properties also run the risks of squatters, thus endangering the residents of the neighborhood and further keeping out potential buyers for non foreclosed on sellers.
I don't have the solution for the foreclosure mess; I do know it is affecting my seller's and my business. I have one seller with a 3 sided brick ranch on a basement in fabulous shape with all the upgrades you can imagine priced perfectly. There are 17 homes for sale in the subdivsion with at least 6, as far as I can figure, in foreclosure. These are homes originally ipriced and sold the 400-500's; now there are homes in there selling for the low 300's. If they sell before my seller's home does, it will effect their appraisal and their bottom line.
Let's hope the housing cycle, like the stock market has done in the past, makes a comeback and corrects itself. There is an over abundance of homes out there now and buyers who can get qualified and who do put down a chuck of cashola to show they are serious buyers who aren't going to cut and run. Rates are good and first time buyers and even investors are out here snapping up deals. FHA loans are helpig to move HUD homes with a wonderful financing program. Let's try and keep Congress out of it and fix the problem ourselves. And most importantly, learn from it.