The real estate meltdown has the country up to its hips in alligators. Unprecedented numbers of foreclosure filings in almost every state in America, including my state, Florida. My county is Collier County long noted for its immense wealth but it is not escaping from record numbers of foreclosures and short sales.
The $700 billion bailout is supposed to bring some relief by loosening credit and raising consumer confidence levels.
Most all the mortgage lenders have "Loss Mitigation" departments reeling and dealing with the 6 plus million potential foreclosures.
Foreclosure is a terrible thing as the owners are evicted from their homes and their credit is destroyed for many years to come.
That is a pretty bleak scenario for the borrowers and the lenders!
Now let's fast forward a few years when both the financial and real estate markets have turned the corner and are steadily moving up.
I picture millions of the same people who were forced into foreclosure now have a good job and money to buy a home or condo again.
So they go to lender to get a mortgage but their credit report has the big "F-word" on it. The lender refuses to grant the mortgage and loses income. The borrowers do not get a mortgage and neither party has gained.
What's wrong with this picture? If in fact, there are 6 plus million foreclosures, as the media continues to report, it is a ginormous number of missed profit opportunities for lenders.
I think it is way too many for lenders to ignore and keep their P&L Statements in black ink.
What's the solution?
In my view of the near future, lenders will have to revise their credit policies to reflect the reality that so many of these hard-working people were caught between a rock and a hard place and not hold them to the 7 or so years of ruined credit.
Aren't banks in business to make money? That's going to be very challenging if they refuse to do business with millions of customers.
How do you see it?
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