I was interviewed Thursday for a show that is supposed to air on Monday, December 15 on Good Morning, America. It's about the housing market and how to help people who are behind, as well as what steps could be taken to improve the housing market. I made the following points, but they may edit a lot of it out. I hope you get an opportunity to watch! Thank you to Beth Forbes for part of her ActiveRain post - I made SURE to get that out there, as well!
- Until we get housing out of it's "deep depression", the rest of the economy doesn't stand a chance and people won't buy cars until their housing is fixed!. Let's get a government program together that lends money to people who already own multiple properties, who have excellent and deep credit who actually WANT to buy up the over supply of inventory. There are a large number of investors who own multiple properties that actually produce income for them who would just LOVE to buy up some of the great deals available right now but are hamstrung by current lending guidelines that say they can't own more than 4 financed properties. They need to let QUALIFIED investors purchase real estate even if they have more than 4 mortgaged properties already! If they have good and deep credit, have low debt to income, say under 45%, using verified income, have a history of managing rental properties, and have reserves, they could HELP the housing slump by purchasing excess inventory; as it is, with the limitation of FNMA and FHLMC, they can't buy if they own 4 mortgaged properties already which includes their primary home unless they have cash or get portfolio loans which are higher down payments at higher interest rates, which don't make sense for them and they limit the properties they purchase. You can even have it where they must pay an upfront "loss reserve" payment similar to the upfront MIP on an FHA loan and monthly "loss reserve" payments much like monthly MI. Any plan that does not include provisions for these people is underutilizing a private sector solution to what is becoming a government problem.
- Investors/lenders need to work quicker on approving short sales (selling a house for less than is owed on it). There are many people who get fed up with the time it takes to get a short sale approved and they end up withdrawing their offer to purchase a short sale - I just had one withdraw that has been trying since JUNE to get a shortsale approved. A lot of times, they end up selling the same properties later on for $20, 30, even 40,000 LESS than the original offer that withdrew because of the time it takes! This costs banks even more losses and it could have been avoided! They keep saying that they have more requests for short sales than they do people to handle them, so they could fix 2 problems: HIRE SOME OF THE UNEMPLOYED PEOPLE AND TRAIN THEM!!!
- They need to do more loan modifications for the current owners and this will also SAVE the banks money - instead of losing principle in a short sale scenario because an owner can no longer afford their payment, they will get paid the money but it may be at a lower rate or over an extended time. And they need to make the process less difficult - there are loan modification companies popping up daily and they charge the clients $995 upwards of $4,500 - I don't think this is how the government intended this process to work! Also, a modification needs to BENEFIT the client - I have had several calls from folks that were approved for modifications but their new payments were HIGHER! Banks are borrowing money at the Fed Fund Rate, which is like 0,5% so if they reduce the rate on the current owners to around 4% they are still making money and they can potentially get their entire principle back.
- People need to understand that Hope For Homeowners, the latest program HUD has come up with to help people, is not working. HUD doesn't lend money; they insure loans and although they created this program, those entities that do lend money and securitize the loans are not willing to work with this program in its current form.
- People CAN STILL GET FINANCED with credit scores under 700! The news media, and even Donald Trump on Greta Van Suystern keep saying you have to have 20% down and a 700 credit score. UNTRUE! We can still do 100% financing with 580 credit and 97% down to a 500 credit score to get people in a house they can afford and we verify that they can afford it! We are financing homes for people that end up costing them $100, $200, even $300 a month LESS than they are paying in rent but most people are afraid to even try because of everything they're hearing in the news. With the rates as low as they are and with the sales prices down so much, now is a great time for people to buy but the news media has them too afraid to try. The people who can qualify to buy homes are afraid to finance, afraid they don't qualify, afraid they don't have enough money for down payment and closing costs. The people who qualify are also afraid to buy, afraid that they will over pay, afraid that the bottom hasn't been reached, afraid they may lose their job.
- Foreclosures should be slowed down tremendously - if the banks were to foreclose on all of the houses in which the owners are delinquent, they would end up losing so much money that they would either go bankrupt or need even more for a bailout! At that point, who would even want to bail them out when they have the opportunity NOW to assist in fixing a part of it. Sure, mortgages were given to people that probably shouldn't have been (at the government's insistence through the CRA, which, if you add a P to it is CRAP!) but you can't go back and change that fact now - we need to work with these owners to do everything we can to keep them in their houses to help our economy and to help their neighbors - if a house is foreclosed on, it affects the value of all of the houses in that particular neighborhood in a negative way! The problem with home values is that banks continue to foreclose and there aren't enough buyers to keep up with the supply.
- The average person did not create this situation but they are the ones that will have to pay for it at some point in the future in the form of higher taxes to cover the money that was given for the bailouts. These are the people that need to be helped since these are the ones that will end up paying for the bailouts!