What Happened?

Wow, we're about to bring year 2008 to a close, and what a year it has been. In my humble opinion, 2008 will most definitely go down as one of the most significant years in our country's history. So many lives have been changed by what will be remembered as probably the most devastating housing and mortgage crisis of our time. What we as Americans have always relied upon as the safest investment one could make, owning a home, all of a sudden became the worst nightmare as we watched our home values plummet. We watched our neighbors lose their homes after unscrupulous lenders made tons of money by pushing them into mortgages on homes they either couldn't afford, or that readjusted causing monthly payments to rise by as much as $400 to $500 per month, with little or no warning. There were loan products with names like; stated income loans, interest only loans, 100 to 110% loans that would include closing costs and down payments, wrap around mortgages, all of which were done with little or no oversight by the federal regulators or the banks themselves. These loans were then broken up and packaged into investment products and sold to investors with little or no disclosure, only promises of significant returns on investment. And if that wasn't enough, companies like AIG, Leyman Bros. and Bear Sterns would even sell the investors insurance against losses, never really anticipating having to pay out and never having the resources available to do so if they did.

In places like Florida, California, Las Vegas and Phoenix we first saw runaway appreciation, and then property values tumble by as much as 35% after the bubble finally burst, causing a panic that swept through the market like wildfire, ultimately having a negative effect on our market here in Tennessee. Even though our market has remained pretty stable throughout this meltdown, we have seen its effects. While over the years, our homes here in Tennessee, have appreciated at a fairly conservative rate, we haven't seen that wild fluctuation as in the areas stated above. Where we see the effects, is with those looking to relocate to Tennessee who have not been able to sell their homes in order to move.

To go along with that, the banks have tightened up their lending policy's which not only had an effect on people seeking to refinance or obtain new mortgages, but also those that relied on short term loans in order to operate their businesses and to make payroll, thus forcing them to lay off workers or even close their doors. It's affected people looking to finance a new car, or obtain a credit card also. All in all, it's been quite a learning experience to say the least.

However, in saying all of that, I do believe there is light at the end of the tunnel. I sincerely believe that, we as Americans, have always shown our resiliency when it comes to times of uncertainty, and have been able to not only bounce back, but to become stronger and have learned from these situations. We have always pulled together as a people, and have lent a helping hand to those in need. We will all have to make some sacrifices in order to get out of this situation we're in, but I have confidence we can do it. As long as we continue to believe in ourselves, there's absolutely no stopping us.

Just remember, "If it's meant to be, it is up to me".

With a smile,

Bob Trewyn