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A RANT...

Managing Real Estate Broker with eXp Realty

March 31, 2008 06:02 AM

Sorry about the "RANT!" But after reading this LA Times Article, I had to let out some steam...

Unfortunately, the folks who made hand-over-fist-money during the boom will be the only ones laughing when it all finishes falling down. (ie, the ULTRA-RICH lending tycoons who are the only ones TRULY being protected financially by our government's "Mortgage Crisis Fixes"...this is probably because many of them ARE OUR GOVERNMENT leaders.)

Even the responsible poor schmuck who simply wanted to own a slice the "American Dream" is going to have his dreams, and life savings, buried in the financial avalanche, because the home of his dreams has fallen so much in value it will take too long to make up the difference.

Predatory and sub-prime lenders should be ashamed. You were supposed to be 'the experts' for your borrowers, guiding them down a safe financial path. Yet you were the very ones telling poor 'Joe-Schmo', "Yes, you qualify for that loan even though you have NO downpayment, NO job, NO income, NO assets, you just bought a $55,000 car and owe another $40,000 on your jet-ski...YOU BET we will lend to you!" I have heard of the huge signing bonuses many of you made on these sub-prime loans. I have heard that there was an upfront payoff for many of you originating this type of loan. With that type of 'incentive', why would you tell Joe to go and sell his car and boat and save some money and come back to you in a year when he got his finances in order??? FOR SHAME!!!

Additionally, it seems everyone is focused primarily on purchase loans...no one seems to be paying any attention to the fact that a huge % of the other folks who saw their equity rise dramatically opened a HELOC on an ARM and drained their equity to buy depreciating assets like boats, cars and RV's. Or, worse, they vacationed on their equity, leaving it all in Cabo San Lucas, Mexico. Sure hope the memories were worth dilluting your financial future. Sure hope the RV can accomodate the whole family comfortably.

Many folks are in the unenviable position of losing not ONE but TWO or MORE homes because they did the 'buy and borrow equity' trick to continue buying...leapfrogging from investment home to investment home, never having the intention of living in or renting any of them, stacking up little vacant houses and condos like cord-wood. This created a housing crunch that was entirely built on an invisible and non-existant population. The perception to the builders was that we actually did not have enough housing to go around, so, hey! We need to BUILD FAST! So, lucky us. We have a glut of poor-quality, thrown-together, subdivisions to try to pawn off before they all come apart in the first windstorm. This is not just a 'house of cards', this is whole "subdivisions of cards".

Do you ever wonder where all those 'get rich quick on real estate' guys are now??? They certainly are not touting their 'can't lose systems' on the infomercial circuit anymore!

I saw this coming a long, long, long time ago.UGH!

Hopefully it will be all fixed by the time my daughter wants to buy a home.

Still living good, and being happy in Bellingham's wonderful SAFE REAL ESTATE HAVEN!

Live good. Be happy.

-Mimi

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Eric Kodner

Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN

Wayzata Lakes Realty: Twin Cities, Madeline Island

When the American people finally figure out who did this to them, and how it was done, they'll remember.

The legacy of the current housing crisis will be a large segment of the public who lost their homes, who experienced financial stress and personal tragedy. Most of them will never come back into the housing market. But they will remain suspicious of mortgage lenders and others in the real estate industry, whether we like it or not. And their bitterness towards our industry is something that we will all have to deal with.

Mar 31, 2008 06:26 AM

Mimi Osterdahl, NW Living

eXp Realty - Bellingham, WA

"Do good work for good people."

Eric-

On a positive note...I recently saw a survey that asked who the American People blamed for the current mortgage crisis enduced economy and REALTORS did not even make the list! Hooray!

Mar 31, 2008 06:38 AM

Mimi Osterdahl, NW Living

eXp Realty - Bellingham, WA

"Do good work for good people."

"Anger is a prelude to courage." -Eric Hoffer

Live good. Be happy.

-Mimi

Mar 31, 2008 06:42 AM

Anonymous

Mark Jones

Oh and I`m sure YOU realtors did not benefit in any way correct!! You were able to sell houses to people who in a normal market could not get approved and also sold for more money than in a normal market..There is plenty enough blame to go around and don`t tell me that some of you realtors should not bear some of it!

Mar 31, 2008 06:48 AM

Anonymous

Mark Jones

P.S. Live good. Be happy.

Mar 31, 2008 07:04 AM

Mimi Osterdahl, NW Living

eXp Realty - Bellingham, WA

"Do good work for good people."

Thanks for stoppin' by, Mark. I am guessing that you are a Mortgage Broker? Your pseudonymn does not allow me to click through to see who you are.

I know there were PLENTY of unscrupulous agents who jumped in to the business and functioned from a place of greed and "how many houses can I sell as fast as possible?".

I chose to send my clients to get pre-approved by lenders I knew to be honest and reputable, who would take the time to council my clients on their CHOICES and what their individual choices would mean to their financial future.

I breathe a sigh of relief every day for doing my best to protect my client's from poor financial decisions, (Ultimately knowing that the loan my client's chose was their CHOICE) thus protecting my business from that fallout as well.

From what the poll showed, the general public did not put us on the blame-list, and for that, I am greatful!

Live good. Be happy. Don't shoot the messenger.

-Mimi

Mar 31, 2008 07:38 AM

Tom Braatz Waukesha County Real Estate 262-377-1459

Coldwell Banker - Oconomowoc, WI

Waukesha County Realtor Real Estate agent. SOLD!

Mimi

This has been coming for some time. I saw it building up and getting out of control.

You are right; lots of people are going to lose because of it.

Regards

Tom Braatz

Mar 31, 2008 08:05 AM

Sandra Carlisle (Ayers)

Berkshire Hathaway California Properties - Newport Beach, CA

Real Estate Marketing & Sales

On a not-so-doom & gloomy note...

92.7% of Mortgages are CURRENT

Over the last 20 years the average default rate was 1%. So, that leaves the "mortgage crisis" at about 6.3% of all loans. We have had two cycles of default and it still averaged out to 1% and most likely in another 20 years will average out again.

Mar 31, 2008 08:23 AM

Eric Kodner

Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN

Wayzata Lakes Realty: Twin Cities, Madeline Island

Sandra, you're correct that the vast majority of mortgages are current. But that small percentage of defaults have put real estate and the financial markets into a real tailspin! In many ways, the default rate is misleading. Ask someone at the Federal Reserve and they'll tell you it's a real crisis, not a manufactured one.

In addition to that, the percentage of delinquent payments on credit card and revolving debt nationwide is huge. There's more to this situation than meets the eye.

Mar 31, 2008 08:45 AM

Anonymous

Mark Jones

No Mimi, not mortgage broker.....Bear Sterns broker.

Mar 31, 2008 09:12 AM

#13

Mimi Osterdahl, NW Living

eXp Realty - Bellingham, WA

"Do good work for good people."

Sheesh! Bear Sterns...BUMMER Mark!

The guys at the tippy-top over at BS (indeed, a fitting moniker) are the ones you should be cranky with! Not a silly little, Live good. Be happy. Realtor in Bellingham Washington doing her best to make the world a better place, one honest transaction at a time.

-Mimi

Mar 31, 2008 09:22 AM

Anonymous

Mark Jones

Your right Mimi. Sorry, I just wanted to vent also. I know that in any profession there are professional representatives doing the best for their clients and those as you put it unscrupulous. I call a truce and take you at your word that you are a professional. As to the poll you mentioned, we Americans have to look beyond polls. Ultimately all decisions are personal choices..I hope this disaster is teaching many of us what is really important in life..Doing what`s best for clients reaps more rewards in the long run. Take Care and I hope you continue to be happy and live good. Mark

Mar 31, 2008 09:49 AM

#15

Anonymous

Mark Jones

Since you like quotes I thought you might like this one from the Bible. Proverbs 22 7. Rich rules over the poor and the borrower becomes the lenders slave.

Mar 31, 2008 10:06 AM

#16

Mimi Osterdahl, NW Living

eXp Realty - Bellingham, WA

"Do good work for good people."

Mark-

The book Financial Peace by Dave Ramsey is based on your attached Bible quote, and, being a believer in The Truth, and a believer in this important message, and a hater of slavery of all types...my business principles and my financial life are built on this important, debt free, message. (Does that help you understand "Live good. Be happy." as a 'business credo' a little better?)

I pass Dave Ramsey's books forward to anyone I run into who is struggling with debt who would be empowered from the messages and debt-free-living-solutions he offers. Financial PEACE...aaaahhhhhh!

Debt is not only a master over the poor...it is a thief! (I have written on the subject in AR before...maybe I should re-post my blog entry titled Debt is a Thief!...it is a good one!)

Cheers to quotes, cheers to truces!

Live good. Be happy. I wish you nothing but the best.

-Mimi

Mar 31, 2008 10:34 AM

Gary Woltal

Keller Williams Realty - Flower Mound, TX

Assoc. Broker Realtor SFR Dallas Ft. Worth

The house of cards is falling. Too many people used their homes with the slimy lenders as ATM machines. The foreclosures and short sales hurt the property values for the rest of us living sane lives Mimi.

Mar 31, 2008 11:47 AM

Colleen Fischesser Northwest Property Shop

NextHome Experience - Chelan, WA

A Tradition of Trust in the Pacific NW since 1990!

Mimi, rant away! It's truly sad and unbelievable. I had to turn down one prospective client who wanted to do this type of borrow to buy over and over again and I just couldn't in good conscience go along...no idea where he is now or whether it worked out for him or not.

Mar 31, 2008 02:17 PM

Lisa Marie Thomas

Prudential - Salt Lake City, UT

great rant, all i know is that i can sleep at night and that my past clients are safe and sound in their little beds as well. unfortunately, i do have a few clients now that i am trying to save from financial ruin because they were basically greedy, and made some of the mistakes you talked about. i don't know if i can save them. i am trying.

Apr 02, 2008 05:47 AM

Eric Kodner

Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN

Wayzata Lakes Realty: Twin Cities, Madeline Island

The "American Dream" of housing is nearly DOA right now. In many parts of the US, homeowners have no liquidity. If they wanted to sell their homes, many of them couldn't do it, unless they were willing to cut the price hugely. In our area, I meet owners everyday who are stymied by "can't sell, can't move, can't buy". How long will Americans put up with this situation?

Apr 02, 2008 05:54 AM

Richard Sweum

1st Security Bank - Everett, WA

It makes me sick. WAMU has been one of the worst perpetrators, option arms with helocs behind them to 100%, their sub-prime division (no defunct) Longbeach was also horrible. They would pass out Helocs like toasters to anyone that wanted one. There is enough blame to go around, but horrible products were offered and at too lenient of standards. The unwind is going to be brutal. I come across more and more borrowers that owe more than there house is worth and while it's there responsibility as well, they should have never been allowed to get into the situation they are in.

There is no easy fix to this problem, but the result will be significant price declines, regardless of our strong employment in the NW.

Apr 02, 2008 07:53 AM

Mimi Osterdahl, NW Living

eXp Realty - Bellingham, WA

"Do good work for good people."

Rich, Eric and Lisa-

Thanks so much for stopping by and leaving such great comments! I think it is up to the PROFESSIONAL REALTORS (those who are in it, and have been in it as a career) along with the PROFESSIONAL, HONEST, LENDERS to work diligently to help our current situation find its center again.

Study up on creative ways to help folks move on (seller carry-backs, Nehemiah, etc...).

Encourage LONG-TERM housing for clients. Remind them rigorously that a house is their H-O-M-E...FIRST. The place where they will LIVE, the place where they will celebrate with family, eat dinner, create community. A sturdy property filling THOSE basic needs for our clients is what is most important. Secondarily is the answer to the 'how much will it appreciate over time?' question. Yes, the second question is a very important part of the equation, but it is T-I-M-E and investing energy in the care of your investment through the maintenence of it that will do the work of creating equity. (we are back to housing being what it always was...a LONG-TERM investment.)

It is my belief that housing sold to folks as H-O-M-E will steady this rocking boat more quickly than anything else we can do.

Live good. Be happy. Be a Professional Realtor.

-Mimi

Mimi Osterdahl / The Muljat Group Realtors / Bellingham, Washington / www.LiveGoodBeHappy.com

2008 President Northwest Washington Women's Council of Realtors

Apr 03, 2008 03:52 AM

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