Staten Island Sub Prime Mess!

Well not a day goes by without us hearing about the big drop in housing sales due to lenders losing money on bad loans. They call them sub-prime loans. Bad credit or lots of debt, you go into a sub prime class of loans, but what we are hearing from the Feds, is that quite a lot of lenders sold sub-prime mortgages to people with good credit too. Local and national media have driven it into a frenzy. We are at a point where negative information about the housing industry is about the only thing we hear about. It has affected all money markets. The first few weeks after the sub prime story broke, one player after another in the mortgage business came out with their loss figures. I can't imagine that anyone could put these numbers together so fast. It was almost like press releases were in hand just waiting for the story to break! And there was no shame in it either. Major banks, Wall Street, anyone who has money in the housing market was willing to put their name out there. Then after the dust settled and some lenders said they were closing up shop. The field of lenders got smaller fast, and we are told that new loans would have tighter lending qualifications that would leave many buyers out in the cold. But what's really interesting is that Congress, the White House and political candidates jumped into the fray like a bear into a beehive. Don't any of the people in Washington know what''s going on in the home mortgage business? If they can have all types of congressional hearings on lead paint in toys, and steriod use in professional sports, then I think they need to pay better attention to the consumer being ripped off by unmanageable mortgage loans also. However, all of them are pitching a fix to the problem. Truth be told, the current administration doesn't want the problem, and an incoming one, doesn't want to inherit it. Thank goodness for us that this sub prime mess came during campaign time. Just what we needed another fix. It's strange that Realtors across the country expected the problem to show it's ugly head for sometime now, and probaly it was discussed at lots of office meetings. The heads of financial institutions, the government, and Wall Street just woke up to the problem yesterday. Somewhere in all this, I would think that our great financial minds were asleep at the switch or just left it alone for a reason. I just don't know. If home ownership is one of the most important factors in the US economy, then how could so many dollars be put into funding high risk loans, not to mention lopsided lending practices, risky ARM loans and balloon loans. Families living their American Dream would find out the hard way that keeping a home purchased with such lending practices would not protect them if the market dropped. There's no flipping into a 30 year fixed loan when equity is melting away from higher house values of only a few years ago. Appraisers please take note! So now we can apply the phase "buyer beware" to the mortgage industry. Now, we have to use it in the industry that insisted on credit checks, proof of funds, job verification, paid utility bills, references, etc., etc., to protect their interests., while they were far from forthcoming about their lending practices. Inflated appraisals, point money not available from buyers, but rather borrowed and hidden in the loan. And what about the two-headed loans where the buyer could borrow the mortgage money and the down payment too. All these loans were leading right to higher monthly payments. Payments that choked the wallet of homeowners. Sure, at some point these homes will find themselves again in the marketplace after foreclousre, but what of the family that lived in one. It's like giving a child a taste of your ice cream, and telling them that's all you get. Maybe, a lesson will be learned from all this. Maybe it won't. But as a Realtor, I know that if we as real estate professionals are to be kept to a higher standard to protect the public, then lending institutions must be held to these standards too. There's just too much at stake when it comes to family and community preservation. Realtors can find the best house for a buyer, but we do not loan the funds. Buyers should deal only with reputable direct lenders and fully qualified mortgage brokers, and not mortgage solicitors that come in the form of Internet or un disiplined mortgage brokers. I recommend that a buyer have their attorney look over the mortgage, note and terms, so that they will know what they are signing for, and what will be expected of them later. And the loan documents should be available for reading before the closing, not at the closing. I believe that all of us in the Real Estate business need to be more concerned about this all important part of home ownership. I know I will.