Mortgage Crisis...Republican's or Democrat's fault?

By
Real Estate Agent with Coldwell Banker C&C Properties

Another local mortgage office closed its doors today. The story reads -   

National City Mortgage closed its office on Churn Creek Road on Wednesday, branch Manager Lynda Eaton said. National City, which has five employees in Redding, had done business at that location for nine years.

The story continues but what's interesting is the public's response to this article. Naturally, people are always looking to see who to blame.  I got a kick out of some of these comments - how did it turn into a Republican vs. Democrat issue? Ha.

The Democrat said: "Well everyone should have known that Republican leaders always throw us into recession. The same thing happened here in the late 80's and early 90's. that one lasted for almost 10 years."

The Republican replied: "How can you blame the Republicans for the housing market? We are on a natural down cycle which will end eventually. And if we get a Democrat in office this next go around, they will be lucky enough to take credit for the upswing we will eventually experience. Bush kept the prime rate down and people naturally could not think for themselves and ended up mortgaging themselves out of their homes. Is that his fault too?"

The Independent put in his 2c: "How about blaming the builders, lenders, mortgage brokers, house flippers and speculators who helped drive up the prices to outrageous levels. "Creative financing" allowed people to buy houses they could not afford. It literally was a house of cards. For example, 0 down and paying interest only on a $700,000.00 mortgage and assuming that the value would increase before the balloon payment was due was a financial disaster waiting to happen. The sad part is the honest, hard working people who got caught up in this scheme just to own a home."

Here comes the agent: "Gosh, how could this be happening? Things are different in Redding! We have a vibrant realty market. -Eternally Optimistic Agent of the Real Estate Industry"

And my favorite: "I have been a mortgage loan officer for 5 years in lending 20 and can't help to blame the following for this situation: EVERYONE, we live in a society of individuals always wanting more, this is natural. The lenders(banks/investors) have been creating more and more programs to get people into homes or refi their homes, because the lenders want more. The sad part is, the lenders creating the programs were not watching out for their customers, just the bottom line - PROFIT. Some loans so attractive, financially speaking, to brokers/loan officers to sell why offer anything else? Any good sales person can make a loan look good to someone who just wants to buy now and pay later. The really sad thing is that we have folks in difficult to remedy mortgages, mostly due to high loan to value's and negative amortization loans. Yes, they are at fault for signing but who made that loan available to begin with? Now, what to do? There is always a chance for reform and by making mistakes we learn. Let's just hope that we do learn, I think the lenders are. Signed, Formerly with one of companies mentioned, but still making loans! :)"

WANT MORE?  READ THE FULL STORY.

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Rainer
10,188
Jon "J.R." Finger
Fairway Independent Mortgage Corporation - Charlotte, NC
Reality is that politicians rarely have a great influence on the economy, except in people's perceptions. Thank God we live in the greatest country ever created. You gotta love a market economy! Most congressmen and senators wouldn't know the difference between an A paper loan and a term paper. Fact is, most of them are too stupid to understand basic economics anyway and only make the situation worse by meddling, which you can be sure they now intend to do.
Sep 27, 2007 12:23 PM #1
Rainer
18,004
Beatrice Cooper,
Finacial Destination - Cape Coral, FL

I SAY THEY LOWER RATES AND ONLY GIVE OUT FIXED RATES AND NEVER LEND OUT MORE THAN THEY CAN AFFORD.  I FEEL WE HAVE A LOT OF DREAMERS WHICH ARE SOME OF THE PROGRAM NAMES.  WE WANT MORE THAN WE CAN AFFORD.  WELL IF THATS THE CASE WORK FOR IT FIRST AND THEN BUY WHAT YOU CAN AFFORD.  WELL OVER HERE IN CAPE CORAL FLORIDA THE HOUSE MARKET WENT UP TO FAST AND THE PRICES WENT UP AND NOW IS THE OPPOSITE THEY ARE GOING BACK DOWN.  SORRY FOR THOSE WHO BOUGHT HIGH AND NOW THE HOUSE IS NOT WORTH THAT ANYMORE. WELL WE CANT FIX EVERYONES PROBLEM WHEN WE BRING UPON OURSELVES SOMETIMES.  BUT WHAT DO I KNOW,  YOU KNOW BEST.

WELL GOOD POST

 

Oct 04, 2007 07:37 AM #2
Anonymous
Anonymous
I was one of the employees at National City Mortgage who was laid off when the branch closed. National City's primary lending business was A, Alt A paper. We were a victim of the secondary market crisis in which the real story is really at...the investors buying mortgages other than fannie or freddie have disappeared making banks and other lending institutions close their doors or downsize in fear of profit losses and inability to raise capital ie lack of investors buying mortgage back securities. The average person blames mortgage brokers for this problem, which is totally wrong...the investors along with the funding banks made the program guidelines and funded the loans...now that the investors have decided that the loans are too risky, they have bailed out of the market and have caused this whole mortgage meltdown. This has resulted in increasing mortgage defaults (due to borrowers inability to refi out of an adjustable loan) and an abundance of distressed properties, which results in declining values and the trickle on down effect goes on from there. I see no end in sight--at least in the near future. The lowering of the fed funds rate has not done much to help long term interest rates either..the banks seem to be benefiting from the profits of borrowing cheap money from the feds and keeping it in their pockets and not passing it on down to the consumer, which I assume was the whole point of lowering fed rates. It a very volitile situation right now...were pretty much day to day on rates...we never know what the day will bring...I've never seen such a volitile market like this before.
Apr 21, 2008 11:53 AM #3
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Chris and Maria Jeantet

Redding CA Real Estate Couple
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