I read a post by Fred Thomas III; in which he spoke about how the Real Estate Industry and the Lending Industry seem to be taking the brunt of all this discourse over the number of foreclosures and defaults on mortgages. It has put us all in a situation that we feel like hanging our head in shame. I agree with Mr. Thomas III on a few key points:
- Real Estate Agents are the professionals with respect to showing people properties that fit there needs and their price range. It is not there job to handle the financing for a particular client; that is the job of the mortgage professional. My saying has always been "I sell loans and the Real Estate Agent sells houses". My reasoning for this is that I spend my entire day educating consumers on the various products and options that are available to them. I do not care about the difference between a colonial style house verses a split foyer; it is not my job. What is my job is to make sure that the property is valued properly and that the consumer knows all aspects of the financing package.
- Let me be clear about my thinking regarding mortgage products, as Mr. Thomas III spoke about earlier. There is no bad loan product (ARM's, Option ARM's, Fixed Rate Loan, etc). The mistake that was made is that loan originators and some banks allowed consumers to choose from all options when it was our responsibility to educate them as to why certain loans could be dangerous for them verses other more predictable loan products In other words certain loans are for specific consumer issues, they are not for everyone.
- But just as important as it is for loan originators, banks and Real Estate professionals to act responsibly; it is equally important for consumers to "READ" and understand what they are signing. If they do not understand they need to state that they don't and seek clarification until they do understand. Every Client must receive a copy of the Good Faith Estimate, which clearly outlines the total costs of the transaction and the amount of the monthly mortgage payment. Also the Truth-In-Lending; further informs the Client as to the numerical reality of the mortgage payment now and in the future. My point here is that the Client either choose to ignore these documents or more than likely was disillusioned into believing they could afford the payment.
I was listening to Joel Osteen on cable yesterday, and he said something important; "If we keep speaking negativity, then that is what we will experience, but if we think, speak and act in the positive then that will become our reality" My point here is that there is still alot in this market to give us cause for hope, and this is what we must focus. Like:
- FHA Loan Limits are the hoghest they have ever been, which can help get rid of some of this excess inventory.
- Interest rates are dropping to an "All Time Low", therefore there are people who can afford a home and still get a good fixed rate.
- Most of the poeple who were in this industry for the "quick-buck" are now gone or soon will be, which is a good thing. We who are left will change this industry back to the respectability it and we deserve.