The problems in the mortgage industry has caused the last year to be a rough ride for many in the country and looks to be possibly an even rougher ride for many more next year.
Those who played by the rules will be paying for the unethical and unprofessional behavior of others. We have all read stories about loan officers, real estate agents and appraisers who have conspired to inflate prices and pull out cash or take kick-backs on real estate transactions in various parts of the country. Those who did that should be made examples of. Loss of license and the right to ever practice in the profession along with serious prison time is definitely in order. The profits gained by their illegal activity needs to be seized by the government, just like they would do for a drug dealer or anyone else who has ill gotten gains.
It makes my blood boil every time I read a story about how greedy, dishonest people inflate prices of homes to line their pockets with cash. They stick it to everyone around them. By inflating the sales prices of properties they have injured many folks for large sums of money. They have artificially inflated values of properties in the area; causing buyers to pay more than they should for their homes. The lenders they cheated will now be taking huge losses as a result. Investors and future buyers will all be paying more and having to meet even higher standards to get their loans, thanks those responsible for past transgressions. Those victims who have since purchased at inflated prices, lost valuable equity thanks to their fraud.
On a human side they have injured the reputation of their professions. Those of us who conduct ourselves in an ethical, professional manner will be paying for what the small minority of dishonest and less than professional have done. Their actions have caused a loss of the public's trust and now leave the ethical professionals to clean up the mess they left.
In my practice I do not see the problems anywhere near the extent we read about in other parts of the country. It still impacts us all; because the mortgage money is affected everywhere as a result of what happens in one part of the country. New laws and restrictions will negative impacts on future borrowers. First time buyers will face many new obstacles.
I wrote a blog post yesterday that asked the question why these problems seem to be more prevalent in other parts of the country: Why Does Hawaii Have Fewer Foreclosures?
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Randy you are right, Loan Fraud hurts everyone in the Real Estate business. Like many other areas of life, the majority ending up paying for the minority does.