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When 2 Wrongs Might Make a Right

By
Real Estate Agent with Morris Williams Realty

 

I guess its my turn to be unpopular again..But I do try so hard to be consistant. I found a featured post by    Teri Ellis, a vey nice & proffessional person, and read it with a sense of disbelief. Having worked in this field now since 1992, I too have seen many changes in the market  .file:///C:/Documents%20and%20Settings/Administrator/Desktop/The-New-Buy-and.htm

http://activerain.com/blogsview/548647/The-New-Buy-and

This market is not without its challenges, but the homeowners that bought in the last few years were encouraged by the entire proffession to jump into loans that were intentionally difficult to understand. They were encouraged to buy homes that everyone knew were just off the charts, but buy now and refinance later.

Who did not get the teaser loans brochures in the mail. By telemarketers. In fact the TV and other media were alive with the new social acceptance.

Everyone was doing it and getting rich. Who among us did not sell homes to OUR CLIENTS while turning our heads at the prices, the paper work, the entire industry promise of the increasing market will justify all decisions. You know it. I know it.

Now there is a trend toward those responcible home owners who cannot stand another increase. Interest only loans that have increased the rates to nearly double home payments are eating into your savings. The promise of refinance is now an ugly memory, its just a matter of time before there is nothing else to cut out of the budget to keep the payments up.

So the post discusses how terrible it is for these people in this situation to go find another, smaller, now much cheaper home and purchase it, and default on the original home. The home that was driving them closer every month into bankruptcy.

When I read this story it was hard for me not to personalize this post into the faces of a handful of couples that I know are doing this now. One is a family member, who can do this or face the obvious consequences. The post seems to have quite a following, and I really don't understand. Here is my response..Like it or not..

 

I came back to see these responces...I am surprised at this outrage....I guess its better for these people to just whittle thier savings down to nothing, go into foreclosure, and join the ranks of all those with ruined credit and still have no home...Have you tried to get someone in foreclosure into an apartment...Sorry...you didn't pass the credit checks.....


I take those who read back to a  fact...A recession is when someone down the street loses their home..


                                                       A Depression is when you lose yours..


If the mortgage fraud police go back a few years and start putting everyone in jail that participated in No Doc loans, then we as a society better kick all the murderers and robbers out to make room for the thousands and thousands of Realtors, mortage brokers, Bank Employees, Loan Officers, Appraisers, and all the rest of us that need to show up and turn ourselves in now. Lets just get off the high horses and go turn ourselves in..


Quit blogging, just go turn yourselves in for all the home loans and mortgage fraud that has already happened in your presence over the last few years. Just because you did not sign the docs yourself dosen't mean that you weren't involved..Just because everyone was doing it does not clear your concience.


How many here did not turn your head as YOUR CLIENTS signed these loan docs with the full intention of Re-financing before the new rates started kicking in...This situation is always about the family that has to make choices..The majority of these deals are interest only with increasing payments...They will NEVER PAY THE HOUSE OFF...


Like it or not, this is my opinion... One last Question...What would you do if it was your situation, your financial ruin that was coming up...


I am all done now

Ron Moore
RE/MAX Professionals/Regal Builders - Retired - Florence, SC
MOORE Thoughts

WOW, Mike!  I'm glad you got it off your chest and hope you feel better.  Though you have a lot of logic in what you're saying, I think you are a bit over-reaching in saying, the homeowners that bought in the last few years were encouraged by the entire proffession to jump into loans that were intentionally difficult to understand. They were encouraged to buy homes that everyone knew were just off the charts, but buy now and refinance later.  Hope it doesn't burst your bubble, but I know and work with many agents and loan officers that didn't take part in that fiasco.

Jun 14, 2008 04:09 AM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Mike, in all instances we have to do the right thing. Sometimes the blame should be more squarely  on the finance companies that "encouraged" people into bad loans. Sometimes the consumer was not well educated on what they were signing. There is enough blame to go around for banks, mortgage companies, and consumers who got themselves in this pickle. But the downsizing and letting the more expensive house go into foreclosure is just a bizarre tactic. Surely they would try a short sale first.

Jun 14, 2008 04:25 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Ron  ...Could be the Caffiene, could be that I am very close to this situation and I see no other way for them to go... Mortgage fraud or something like it got them there, what else is there for them to do...By the way, the people I know are trying to sell, lease option, rent..anything....What do you recommend to a long time friend whose home loan is now over 60% of their income...The home is now dropped over 25% in value...ANd newer homes like it are being sold for so much less...

When you look at thier choices, kids to feed, credit to use for a short time before they lose it all...I am baind them all the way.

Jun 14, 2008 04:35 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Gary, we have traded comments for months here, I do truely respect your opinion.

But if they went to a short sale, could they get into another home...You know the answer...If it was your brother, friend, cousin....The downsizing, while bizzare, is survival...They don't lose thier cars, the kids can still go to camp, and the new home will have to be home for quite some time....Its important to think this thru from a different point of view.

I can tell you of a friend with a home bought for 428k in July 2005.. New inventory homes in the same nice subdivision are being attempted to be sold for 275k now....Thier payment is up past the point of affordable, and due to a change in banking a payment got in 3 days late...ZOOOOOOM  goes the payment on the next coupon...too bad, they are now screwed....can't sell the home, cna't keep up the increased payments..they cn move down the street for $1500.00 a month less on a fixed rate... Screw the bank..its all about stealing the houses back they swear they don't want...

Jun 14, 2008 04:46 AM
Steve Loynd
Alpine Lakes Real Estate Inc., - Lincoln, NH
800-926-5653, White Mountains NH

Mike I have been insulated from the primary home market and the keeping up with the Jone's issue that suburban America deals with on a constant basis, but as a Realtor looking in from outside, I think consumers drove the market and stepped up to prices that were on the edge of affordability, and refinancing aside if you took the low rate loan to help you qualify you were buying too much property for your pocket book. Steve

Jun 14, 2008 05:12 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Steve...no doubt you are correct in your context....but the point is what is acceptable for those who bought into the heigth of the market, made a move that seemed to be OK, joined in with the largest surge in upward home ownership in recent history..only to have the merry go round stop and find its impossible to play by the rules to get off....

Jun 14, 2008 05:27 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Steve...no doubt you are correct in your context....but the point is what is acceptable for those who bought into the heigth of the market, made a move that seemed to be OK, joined in with the largest surge in upward home ownership in recent history..only to have the merry go round stop and find its impossible to play by the rules to get off....

Jun 14, 2008 05:27 AM
Anonymous
Anonymous

Mike- When we saw the  falsly inflated prices start to happen we left the residential sales and we went into land development for developers. We had our past clients call us to say they wanted to do the flip thing and we told them it was not the right thing to do, that if they don't have the money to make the mortgage payments on the flips until they flipped that we would not be their agent. well, they had to use other agents because they insisted they wanted to buy 2 to 5 homes and flip them. We warned our entire BNI group of the impending bust all to fall on deaf ears. The mortgage broker in our group got upset with us for saying that people need to be careful, he said we were impacting his business negatively. Well, Nestor was telling the truth.

We did not get back into residential sales until 2007 after the bust. Now we get the calls, you were right, we should have listened to you. I do not feel sorry for these flippers. They had no business getting involved.

Now we do short sales too. Our short sales are true hardships. But I feel that they need to rent and then get themselves back on their feet. We represent the real hardships. We turn down the ones that used their homes as ATM machines to buy the 2 Escalades in their driveways and just chose to go partying instead of paying their mortgages. Those are not hardships.

I do not think it right for me and Nestor to go and buy a house in this market that we can get a very nice house for much lower than what we owe on our house, just because the market went down. Then move into the new house and let this one go into foreclosure? That is unscrupulous, unethical and amounts to fraud really. We would not do that. I don't think it is right for others to do so either.

Jun 14, 2008 06:01 AM
#8
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

The above comment was by me, Katerina. I was typing my comment, went to get a drink of water, came back, finished typing and this wierd default thing kicks me out of being logged on, so I had to log back in.

Jun 14, 2008 06:04 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Kat, its good to see you commenting..I am the first to admit that every situation should be taken on its own merits....I agree that to do it only to defraud would be wrong, but when the mortgage keeps accelerating, the choices start to dwindle pretty quickly..Best wishes to you and Nestor !!//

Jun 14, 2008 07:36 AM
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

Mike, I have children. When they were growing up, they offered all sorts of justifications for making the wrong choices. I see that you believe strongly in your point of view, and as you know - I completely disagree with it being okay - as Katerina put it - to commit mortgage fraud. Plain and simple - wrong!

Pepper

Jun 17, 2008 01:52 PM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group

Hey Teri,,,One of the families I was referring to has a resetting mortgage..It just keeps going up..The husband, making good money for the last few years in construction trade, is ill equipted to get another job that pays nearly as well..Now a developer has declared bankruptcy and left him hanging on the brink...He has been using his savings, the bank cut off his credit line...By being late on ONE  on payment the loan reset again at an even higher rate...I have known this family for over 15 years...In this market he can buy another house and work his way out of it before he loses it all...Fiexed rate, nearly 2000.00 per month difference, plus NEWER HOME...     The bank wont help until it goes into foreclosure, he is not behind yet...

They are selling new or nearly new homes in his subdivision for over 200 k less than what he owes on his house...Unless he misses a few payments they wont talk to him, he still has great credit.. So, how would you handle this for your family..I suppose yu would just tell them to hnor your commitment and stay there until the money in savings is all gone, and then, with ruined credit, do what??  He still has a chance now to get a house they can afford, he can protect his family...In two more months the options are gone..

 

 

 

Jun 18, 2008 12:53 AM
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

Mike, indeed, very sad. There are so many victims in this fiasco of a market. ;-)

Pepper

Jun 18, 2008 05:01 PM