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Let's Fix the Sub-Prime Crisis

Read this story about Joe Sixpack and the Subprime Crisis. Then come back here and tell me who is to blame in that story.

Was it Joe...who by the end of the story becomes "Joe Sixpack"? Was it the Realtor? Was it the Lender? Was it the diappearance of the lenders who were supposed to do the re-fi in two years? Maybe it was the purchase of the puppy that broke the camel's back.

I'm sure you can all relate to this story and how it just crept along to where we are now...hard to find the villains in it. But we're all experienced professionals, so let's give it a try.

I look forward to reading your comments.

Posted by ARDELL DellaLoggia on 10/11/2008 04:01 PM

Comments (14)

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14 Comments on Let's Fix the Sub-Prime Crisis

OCT

2008

What a story. I've read it twice and I change my mind on who should be smacked around, Ardell.

I am sure the story is worthy of a Pulitzer. Excellent writing.

Ardell,

I'm sure it was a mix of everyone...remember when everyone wanted to jump on the bandwagon? I bet if you asked that question 5 yrs ago it would just be brushed off.

Neal...did you read the story? No cheating.

Even in the heat of multiple offers I advised my potential buyers not to remove the inspection clause or the financing clause.

The Realtor calculated the 33%, they should have never let him go higher, the lender should have not let him go higher and promised a re-fi. The Realtor should not have waived all those inspections. Ok you didn't mention how old the children were, but in my area, many couples without children or smaller children start off in Districts not as high as Ann Arbor, build equity and them move into Ann Arbor for their 2nd home.

So everyone had a hand in it. Including the buyer who got all excited being in a competitive bidding situation. So I think all three over extended. Realtor, Lender and Joe Sixpack.

Missy,

$350,000 in Kenmore was about the cheapest home you could get at the time. Most 3 bedroom houses were at least $500,000 at the time, and still are. I did mention the ages of the children. One was in the belly and the son was 2 years old. A townhome in Seattle was $400,000 to $500,000. $350,000 was the bottom price range for a home most anywhere.

Sharon,

I never took out Finance Contingencies either, but do you have a rate cap in yours? We don't. Everyplace ele I've worked the Finance Contingency had a rate cap so that if it flipped into sub-prime the buyer had an out.

Very depressing story, Ardell, but I'm sure it reflects the experience of many. The agent and the lender should be shot. Really sad.

OCT

2008

Ardell,

Yes I did...well most of it until I started to get that same sharp pain in my stomach I get after being poisoned by spoiled food:) I couldn't finish it.... Disgusting isn't it?

Mary,

I've had journalists call me to help them write a story on sub-prime looking for the right "angle". I decline to help them because they simply do not "get it".

I'm just sad. Who cares who is at fault? People need help, and they arent getting any!

Ardell,

I really like how you can write such a poignant post, but don't like the scenario and it has happened all to much for anyone's liking.I personally like to sleep at night.

DEC

2008

I really enjoyed reading that. In a not so funny way, that was pretty funny how detailed your story was. I have to say, being in the mortgage business for over 10 years now, I seem to disagree with many on this topic. If you boil it all down, it comes down to 1 thing with several variables. People in this country always want more then they can afford.

During those "good" times, looking back now, I can confirm that I turned away over 25 deals in a 10 month period. These borrowers were getting in deep and would not be able to make the payments if anything happened. I can only speak from personal experience when making this statement, and the following is fact. Each and everyone of the 25 borrowers that I turned away because they would regret it later, got a loan from someone else. Each and every one of them. "The guy next door is doing it, so I'm gunna also". Sure, as with everything, exceptions do apply. Yes, bad Realtors out and about, bad mortgage brokers out and about, but show me the gun pointed to the head of the buyer? Many things went wrong. The answers and warnings were provided but no one listened. They didn't want to back then. "It's not gunna happen to me" -

So yes, I do agree that some people got "sucked" into doing things they didn't want. That is what it is. Its sad and I know many that are effected by this today. But rembemer this, when the chips are down, things dont look so great, the economy is bad - always remember, we're the only place on this planet where we can be broke, i mean really broke and still have two cars in the driveway, a cell phone, air and heating. Do we want more then we can afford? Sure, we all do. We just over extend ourselfs and live on credit to do it.

Simple, any agent that would put this couple in the ouse with the payment being over 50% of his take home pay should be put in jail. Yes, this is one reason why we have these problems. Just because the mortgage companies threw us this bait, as real estate agents we have a responsibility to not put people in situations where they will fail. Especially based on the going over 15% or 20% of after tax income for home prices. History has always show us anything above it with incomes under $100,000 usually will not work, And this will even show for incomes in the higher ranges.

It's time we started running our business like professionals and not greedy sales people looking for that quick date. We do have to take the responsibility.

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