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The Truth About Today's Market

Mortgage and Lending with Mortgage Magic

Unless you've been stranded on a desert island for the past year, you are well aware of the status of today's real estate market.  At the core of any dramatic circumstance, be it either good or bad, there are always fundamental truths.  Unfortunately, almost always there are lots of half-truths, partial truths and even out and out falsehoods that overshadow the real truths behind an event.  Equally unfortunately, even for those within the industry subject to such an event, our perception of that event is shaped almost entirely by the media.  I have no doubt that's true in today's market.  All too often, the media reports only part of the story, and usually the most sensational part, leading to a distorted public view of the circumstances. 

I wish I could say that today's real estate market is better than the media portrays it to be, but I believe that's just not the case.  I do believe that the market is worse than it should be in large part because of the quantity and nature of the publicity to which the public has been subjected.  In my capacity as an owner and officer of a mortgage corporation, including my favorite duty of assisting clients obtain loans, frequently I'm asked who is to blame for today's market.  While time and space do not allow me to explain my opinion in that regard, I can say that it is almost everyone in the long and complex chain of players in the mortgage and financial process.  I believe responsibility begins with a well-intentioned but overly aggressive Fed Open Market Committee, includes wall street cooking up ever more complicated vehicles to attract investors who were looking for ever higher yields for the huge and growing pool of investment money (particularly foreign money), and the mortgage and banking industry looking to expand market and profit by gaining an even bigger piece of the American homeownership pie.  Add to that loan agents and mortgage brokers, who all too often allowed the most liberal lending environment in history to cloud their judgment as to what constituted a qualified client, and include last but not least, borrowers who wanted to participate in the seemingly huge profits in the real estate market in the misguided belief that the rise in values would never end and who, in at least some of the cases, paid less than prudent attention to the type of loan program being offered to them.

As I mentioned, I don't believe the market is as good as it should be and that is partly true because of the tremendous influence the media has in shaping public opinion.  What scares me the most is that the media's somewhat exaggerated portrayal of the real estate industry, particularly the lending side, is what many of our lawmakers at both the state and federal level are taking as gospel.  And, what I'm afraid of is that in their overzealous attempts to enact legislation to prevent such occurances in the future, they are going to "throw the baby out with the bath water".  With proposals to eliminate stated income loans and yield spread premiums I fear such legislation, at least in it's current configuration, will hurt more people than it will help.  I support legislation that would require licensing and oversight of anyone and everyone who negotiates a loan directly with a client and I have no objection to a national registry of mortgage loan agents.  While I definitely would not support it in its current form, I would support legislation that places limits on stated income loans (perhaps a ratio of credit scores to loan-to-value ratios ie: 80% LTV maximum with a 700 minimum credit score) and even a limit on lender rebates, say..1.5% - 2.0% maximum, but altogether eliminating those programs is a mistake and I would hope that anyone in the industry would agree.  We in the industry can voice our opinion by contacting our local legislators and letting them know our thoughts on what makes sense in our industry.  My concern is not only because we earn our livelihoods through the real estate industry, but because it is the American dream to own and enjoy our homes with all the rights that go with it.  I'm proud to have helped hundreds of people participate in that dream and to save a lot of money for them in the process and I intend to continue doing so.  As such, I will support, as I hope you will, well thought out, informed adjustments to the system as long as it enables more people, rather than fewer, to safely participate in that dream. 

I know this is a particularly long piece but I've spent more than thirty-five years helping people achieve financial goals and reslove financial issues and distortions regarding our industry and its participants are particularly offensive to me and I believe, as with most things, knowledge and common sense, coupled with honesty and integrity, are usually the quickest path to the best solutions.  I promise future pieces will be shorter!  

Scott R. Turner
CENTURY 21 Broadhurst - Myrtle Beach, SC
Everything We Touch Turns to SOLD!!
Hey Joe, don't forget to lay some of that blame on wall street, someone had to be buying those non conforming loans. Lets not forget the positives. It's a great time to buy, low rates and plenty to chose from. NOW IS THE TIME TO BUY!! Pass the word.
Dec 19, 2007 11:23 AM
Freddie Gonzales
WEM PACIFIC Investments, Inc. - Daly City, CA

Yes you're right Scott. This is the best time to buy when there are a lot of homes for sale right now.

Nov 03, 2008 11:03 AM