Who's blame is it anyway?

By
Real Estate Broker/Owner with Shepherd Real Properties

It is my opinion that the housing crash blame is pointed at the wrong group.  Sure predatory lending played a part, but a small part.  Many of the houses went into foreclosure because of jobloss. 

High interest rates was a small number compared to the thousands of joblosses that were accurring each month.  That was the problem.  Jobloss.  No Nehemiah, or down payment asssitance, these things helped people get in who would otherwise wouldn't. And thoses that didn't get laidoff, who used down payment assistance, are still in their homes.

I would also blame PMI, which no one is looking at.  I have seen this increase a person's monthly payment by $200, making it unaffordable along with the adjustable rate.  If PMI wasn't so high, maybe we could afford Healthcare. (thought I would give that a plug)  What do you think?

Posted by

Elizaabeth Ann Mosley, BIC

Shepherd Real Properties

 

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Rainmaker
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Jeremy Williams
Red Hawk Coaching - Kingwood, TX
Business Coach, Husband, Father, and Dog Wrangler

Elizabeth,

Great perspective, but I find it hard to believe that Nehemiah and down payment assistance did not play a role.  In my market area where most mostly new construction neighborhoods utilized the programs also promoted adjustable rate mortgages.  It was not the job loss, as our economy is insulated, but the interest rates that after 2 years began to adjust.  I also believe that it is a home buyers personal responsibility to read all the documents at closing.  If they don't understand, don't sign and ask questions.  People need to get back to personal responsibility.  This is not to say predatory lending was not rampant.  That aside, the biggest problem with the real estate market was the speculative buying and people playing in the bubble markets.  Prices were not going to sustain the increases that were taking place.  Hopefully it is a lesson learned, and the market corrects sooner than later.  Thanks again for the perspective.  Have a successful week.

Jeremy Williams
Keller Williams Realty NE
Kingwood, Texas

Aug 24, 2009 09:58 AM #1
Rainmaker
223,439
Brian Brumpton
Keller Williams Boise - Boise, ID
Boise Idaho Real Estate

Elizabeth,

You're talking about two completely separate waves of foreclosures.  The subprime foreclosures are for the most part over and done with and those were not a small number.

The current wave of foreclosures is being fueled by a weak economy and high unemployment rates.  PMI is going to continue as long as Americans continue to buy with little or no money down.  It raises payments and it should, there is a higher likelihood of default when owners have little invested in their homes. 

For example look at the number of foreclosures due to people just walking away from homes they owe more on than they are worth.  The further market declines the higher that number is going to get and lenders are going to continue to protect themselves. 

Aug 24, 2009 10:01 AM #2
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Rainmaker
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Elizabeth Mosley

BIC - Shepherd Real Properties
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