Now we enter a new era. The federal government, which many people believe to control a magic money making machine, has stepped in to bail out roughly half of the mortgages in the U.S. The holder of these securities, was of course, Fannie Mae and Freddie Mac. These are the quasi-governmental agencies that have succumbed to the recent real estate market crash due to one, and only one reason. Greed. Just so you don't think we can point our finger in one direction to find the snake in the woodpile, you should consider that the greed was not limited just to these two organizations and the investors purchasing mortgage backed securities. It originated far removed from the luxury board rooms of these big paper sucking giants. It started right in our own backyard with mortgage lenders, appraisers, and realtors. These are the people that pushed and pushed politicians, under the guise of "Every American family deserves a home" to loosen lending guidelines. It lands in the laps of appraisers, who come up with an "appraised value" to match the selling price of a house, keeping the lender happy and making all the fluffed up security value appear to be real. It has also been strongly fueled by those who created "down payment assistance" corporations, that enabled individuals to purchase overpriced homes, at over inflated values, with no money down. Realtors aren't innocent either. Although they may not have birthed the monstrous fire breathing mortgage dragon, many have done their part in helping keep it fed and growing.
Of course what is done is done. We cannot take it back, but we can move forward. How, you might say, can a mortgage lender, appraiser, or realtor change the whole business of real estate to do what is best for not just you, but for the country?
Mortgage Lenders - I received an email just yesterday from a mortgage lender. This lender was advertising a strategy to "overcome bad credit and get a home loan." Her advice was, tell your bad credit client to get their credit report, and then CONTEST every single collection account. Never mind that you signed a promise to pay, which you broke. Never mind that the debt you owe may be to a small business barely making ends meet. The strategy proposed is to BEAT DOWN the creditors so they will no longer pursue the debt. REALLY? A lender telling a debtor to not pay a legal debt, so that they can then loan them more money? Sound weird? Maybe not. You see the mortgage lender is not the one who will eventually have to eat the loss. Their strategy is to process the loan, make their 3-4% and that's it Screw the country, screw the mortgage backer, I got mine and that is all that matters. This is a real problem that requires massive legislative changes to fix.
Appraisers - One of the "standards" of the professional appraisers society is that the appraiser be provided with the sales price of a home, BEFORE even conducting an appraisal. Appraisers argue that their whole premise, i.e. "the price a willing buyer will pay and a willing seller will sell" is the very definition of an appraisal, therefore, knowing the selling price is crucial to the appraisal process. What a joke! Does it take a rocket scientist to se how wrong this is, when statistics show something like 95% of all appraisals made come in "at" the selling price of the home. If I am a lender, and my appraiser goes out and appraises a property so low that it kills my loan, what do you think my next step is? Here's a hint- go get an appraiser that will give me what I need to make the loan and make my profit. Is this all the appraiser's fault? No. But, it is time that appraisers stood up and say they will no longer allow their industry to be used as prostitutes for lenders.
Realtors - Practice ethics, That is all I can say. As a real estate broker, it is always my obligation to act ONLY in the best interest of my client. If that means advising them NOT to buy a house, or NOT to accept a low offer when selling, it is my sworn DUTY to do that. There are way too few controls in place to make sure that realtors follow this standard. It is up to each individual agent to always do what is ethical and right, whether it costs them money or not. If that were to happen, we would have way less agents, and way less people living in houses facing foreclosure.
Isn't it about time we started caring about the greater good, instead of what is best for each of us an individuals? Or is it too late?
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