Does our government just have nuts and bolts for brains? Can one be so blind to the issues at hand in regards to our economic status, to how much further we are falling into debt, yet they keep announcing rays of hope?
Let me pose a question to everyone. What has happened to common sense and logic? Is common sense not so common anymore?
Before I get into the gist of my gripe, frustration, and fear... yes, FEAR... Whenever I always debate a situation, a fact, or an issue, I always try my hardest to look at it from both sides and not just from my emotional state of mind.
As we venture into 2010, I see more chaos on several horizons. Let's attack 3 important issues that I see will bring much chaos, frustration, and fear.
1. The New Good Faith Estimate. Not only is this form much longer, could delay settlements because of the new MDIA law (Mortgage Disclosure Improvement Act), but it could impose misleading mortgage shopping to consumers. Gerry Suarez gives you his opinion and a good example to why this could cost the consumer more when shopping for a mortgage. Please read : The Road to Hell and the new mortgage disclosures.
2. Foreclosures : There have been estimations that we could see another 1-2 million foreclosures by the end of 2010. One thing that seems to be talked about is the fact that many of the foreclsoures are due to the loss of equity. I know there are reasons for this, but I see the major problem being the huge unemployment numbers and loss of jobs. Why is this not talked about as much? The government spoke so highly about the 2009 stimulus package that was partially structured to help with new jobs. Hhhmmm, inquiring minds want to know what they were smoking.
3. Immature government spending. I will go on the record to state that I have seen so many smoke screens in regards to free government spending, making it sound like the main solution is to keep printing money, and this will help our current economy rebound quicker. But who will pay for this printed money? Let's take a closer look. What about the Tax Credits for first time homebuyers? I know many of you think that this has helped sell real estate, but seriously, who are we fooling. Again, if you take a much closer look at these tax credits, which were first established in 2007, it has not done as much as it was intended. My guesstimating would be less than 5% of all homes bought since 2007, were the direct reason for new homebuyers. Many people were going to buy anyhow. Secondly, because of the lack of government prevention, this tax credit has led to billions of dollars in fraud now. Please read these :
- So you think you outsmarted the crowd because you skipped the $8,000 first time homebuyer tax credit
My summary on the tax credit & free gov't spending : In 2007, there was a stipulation for the homebuyer to pay it back in 15 years. You didn't make a payment until year 3 and in the 13 years, it was only going to cost you about $43 a month to repay the tax free loan. I am soooo confused to why we couldn't go back to this. Again, what is the government thinking?
What about the billions of dollars that were spent on the MBS's to keep interest rates down? People bought with 6% and 7% rates. This has been wasted money only for the good of keeping consumer confidence riding high, when in reality, it will hurt us in the short and long term. Yes, Billions of dollars, to keep rates in the low 5's.
Okay, the economy has been crumbling in the last 2 years and new predictions are now saying possibly 2011 before a true recovery starts to happen. Don't get me wrong, I do believe that we need to tighten some lending requirements, but do we seriously think another 2% for a downpayment would work? Do we seriously think 620 and 640 credit scores will truly make people pay back their mortgages? I know there have been studies done on the different levels of credit scores, but have certain factors been taken in consideration such as :
1. Loss of job
2. Death in family
3. Higher property taxes
4. General cost of living
I wrote a blog at the end of 2007, talking about the fact that we are in a slight recession. My 2007 review and 2008 predictions. I think several of us saw this coming, but it wasn't until 2008 that we were actually told that we are in a recession. You have to understand the true definition and that this definition varies amongst different experts.
Overall, we need to re-look at certain things and to why borrowers miss mortgage payments. What ever happened to the ability to repay vs the credit score? Keeping in mind that things happen that aren't in ones control. Here are a few posts that I wrote about these current issues.
(for those that can't read the name on the desk, it says Chief Bean Counter)
Let me cut to the root of our current problems and why I don't see any relief in sight. This is based on my opinion of watching our government closely for the last 12 months.
It's called greed and selfishness. I am sorry, but many in our government only care about themselves and obtaining new votes for the new elections. Some have even admitted to this which I have written about. They tell us what we want to hear and make this immature spending sound like it will work. Yes, these individuals have common sense, but they don't use it, because selfishness super-cedes this thought process. We can change this by voting for others, or rise up and to protest harder and louder. It can be done, but we need these changes to start in the trenches. I gave some of my thoughts and opinions in this blog from the summer. Call to Action : We must fix the real estate market ourselves!!
Conclusion: I am just fed up with the misleading information that circles from the government, to the media, and then to the consumer. I don't want to make this political, but there are some major political issues and this free spending will put us deeper in the hole. What we need is less government interaction and more small business interaction and private investment. What do you say? Think?
UPDATE : 12/28/09 - 1 pm - I just came across this post by JP Lowry and I think it hits some points that I didn't dwell on, trying to keep my blog short.
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc