....like a kidney stone - not without discomfort. To think this mortgage mess started as a result of too much liquidity in the market place. In the past five years, there was an abundance of money looking for an investment vehicle that would pay a much higher rate of return than those available at banks and brokerages. Brilliant minds decided to use this liquidity to create mortgages. There was a ready market of people willing to pay higher than normal rates in order to get into a hot real estate market. They figured they would refinance at some point, or sell the property at a profit, if the mortgage payments got too hard to handle. These were people who would not have gotten mortgages under traditional lending standards. Investors were able to get high interest and a quick return of their principal, as the mortgages were sold immediately to banks. Banks then packaged these mortgages into securites. It all worked splendidly for a while. To think where we would be if we had taken a longer investment time frame, and put this money into infrastructure or innovative energy development.
So how do we in the real estate community spell relief? If we have been selling real estate for more than a decade, we have seen that the economy works in cycles. This will pass. I suggest we concentrate on three things in the next year: 1) Concentrate on VA mortgage clients. There is money to lend. You may want to hold a seminar at local veterans administration halls and get the word out. 2) Use FHA as a lending vehicle. Tell your clients that 3% down will get them into their dream home. 3) Get back to basics with your business. This includes working within a realistic budget, being very targeted in your marketing, and most important - getting out there and meeting people face to face. No ad will ever make the impression that you will, by meeting and talking with people. Build relationships and build trust. We will all get through this period of insecurity and will see another real estate boom.
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