Rate reductions, loosened lending guidelines, An increase in the FHA maximum?
Will any of this change the market?
I DON'T THINK SO!
The re-education of the American home buying public will have to come first. When we continue to see, on the front page of MSN and in every major media, advertisements claiming that someone can "BUY" a $500,000.00 home for less than $1500.00 per month SOMETHING IS SERIOUSLY WRONG.
No one, and I repeat....NO ONE can "BUY" a $500,000.00 home for only, less than, or somewhere around $1500.00 per month. Rent one....maybe but not "buy".
Advertising this type of loan should not be allowed and confuses the American public yet, it is still being done today....everyday. Should it even be allowed?
Is there any intelligent life left on this planet? Do you think these folks, if they can actually fund a loan like this in todays market, are actually explaining the true loan terms to the borrower. Did they ever?
Sure, lenders can state that they had it all in writing and the borrower simply didn't read their paperwork. ALL 125 pages of it? How many of us here have actually read every word? Certainly a great defense but, buyers place a huge amount of "trust" in their choice of lender. Something lenders, each and every day, in my opinion, take advantage of.
Do the math yourself: 1500.00 per month x 360 months = $540,000.00. Is it conceivable that the "average American home-buyer" has done this math and thought....seems right to me: Lets see, 500k x 7% = $35000.00, add in the lenders fees etc....yeah, that seems right. Possible? I say it is what these folks actually thought and may continue to believe. Do the math. Uneducated consumers have. Attempts to re-educate them after their "consultation" with their lender are usually fruitless. Some listen, the majority do not. These "programs" are simply too attrative and, the tactics used to convince them that they are the best thing since sliced bread are even "better".
We all know that, based on the average consumers debt load that they do not do the math correctly. We have all had buyers who, when signing loan docs, have said " Seven Hundred Thousand dollars! That is what I have to pay? For a 350,000 house? Who is getting all that money?". The "average" home buyer has nary a clue that, over 30 years, that a loan of that size will have a LOT of interest. In the past, many never bought a home because of the cost over time. Still a good investment, when done correctly. Yet, they simply do not understand.
Along comes neg am and teaser loans. NOW THAT MAKES SENSE! Finally a loan that makes sense! Look at the math above. Think that many of these folks didn't? Think that many lenders did not take advantage of this? Think they wont continue to do this? Now more than ever, this type of lending must be stopped.
The fleecing of the average American has to stop and educating the American public has to start today!
Tomorrow.....the lending industry must be forced to change.
Instead of the DOJ focusing on the "lending crisis", they are debating the fees that Real Estate Professionals charge. Barking up the wrong tree, at the wrong time! Temporarily takes them off the scent of the lending scum while they head off to Switzerland.
Not all lenders or lender-agents (which should be banned) are bad. Most have your best interests at heart and will direct home buyers in the right direction. The average will tend to lean towards the biggest liar when it comes to choosing and agent or a lender. An issue that might be helped with the re-education of the average American home buyer.