What Happened? Do You Know? Why Are You Blaming Me?

What Happened? Do You Know? Why Are You Blaming Me? by Bill Roberts.

What happened to our business over the last ten years? Do you know

or just think you do? And why are you blaming me?

I routinely "follow" the blog posts of the mortgage professionals that I

know here on ActiveRain. I read their posts and ALL of the comments

that ensue.

Your Comments

As I read through the comment streams, I am amazed that there are so

many agents that don't understand what happened in our industry.

First, they don't know who the "Actors" were. They don't understand

what Greenspan did. They don't know about Lehman Bros making

everybody who wanted to be, a mortgage banker. They don't

understand the effect of Lehman creating derivatives from all the

mortgages they packaged. They don't understand the impact of

negative amortization loans.

And they don't understand the cause and effect of the rapid reduction

of interest rates on house prices. People "pay" for their homes one

month at a time. They aren't concerned with the Sales Price, only the

monthly payment. As interest rates fell, they could "afford" a higher

priced house. Well, the market reacted by making all houses higher

priced.

And they don't understand that "investors" jumped into this business

when they saw the rapid price increases, where they could buy and

then sell immediately and make thousands in profit.

And then they don't understand the effect of the rapid increase in

interest rates and why the rates went up. Thank Alan Greenspan for that.

The prices stopped going up and the flippers couldn't

make their immediate profits anymore. The "cost" of holding and

repairing became a bad business decision because they couldn't get

their money back, let alone a profit. So they "bailed out" of their houses, and the market.

The Rapid Market Change

They don't understand that when the flippers bailed out they started

an avalanche of price declines.

As time went by, the problem just got worse.

The Crisis

And then the neg am loans reset or recast. Thousands went into

default.

They couldn't re-finance because they didn't have any equity. They

were "upside down" or "under water". However you want to describe it,

it was a disaster for them and for all of us.

But the foreclosure process was "muddied up" because the mortgages

had been sliced up into derivative products.

The servicer put the mortgage into default, but the actual owner of the

mortgage had to pursue the foreclosure.

Then Lehman went bankrupt. It was hard to piece these mortgages

back together to determine just who owned what. So the foreclosure

process took a lot longer than it should have.

Why Are You Still Blaming Me?

As I read all the comments I was amazed that real estate agents and

even some mortgage professionals are still blaming the people that

simply wanted to own their own home for the crisis. They weren't the

problem.

Greenspan and Lehman were the problem. We are all the victims of

what they did.

As in any twelve-step program, the first step is to admit the problem,

but we still haven't been able to do that. The problem was not easy

loans for potential homeowners. These people just wanted a piece of

the American Dream.

The problem was Speculators, Bad Loan Products, and Derivatives.

Until we can admit the problem, we can't fix it. All these "fixes" by

Washington are not fixing the problem, they are just making it worse.

Respectfully submitted by Bill Roberts.