Social Media and the government fail to see the true crux in the foreclosure epidemic. The culprit of the Great Real Estate Depression is a drastic reversal that mortgage lending models have experienced.

 The surge in the housing market stemmed from the greed of easy money.  Lenders were abash in capitol and were willing to extend it to who ever asked.  No money down and 100% financing? Sure we can do that! You’re not able to verify employment?  O that’s not a problem, just tell us what you make and we’ll believe you! Is your credit less than average, don’t worry we’ll lead a blind eye.  We know once you get into your payments you’ll be able to make them, if not, how about less then interest?

ARE YOU FREAKIN KIDDING ME? Well unfortunately, no, I’m not.  This was the state of the industry up until 2007-2008. I should know.  Lenders visited my companyevery day of the week, pleading with us to help get these loans out to a voracious marketplace.  And I won’t lie to you… we offered them.  Everyone did.

But in a quick reversal, today’s housing implosion was caused by lenders going to the other extreme. Today, you can’t get mortgage financing unless you have impeccable credit, sufficient and provable income, and verifiable assets.  Some would say common sense underwriting, but not me.  Today, lenders have effectively cut off half of the market.

 Real Estate is merchandise and like any other product; subtract half the market and watch prices fall.  It’s a simple computation.  If you’re looking to sell your home, just forget about those buying with a lower then 620 credit score.  And forget most of the self employed from being qualified; they typically cannot show the income for the mortgage they wish to buy.  Buyers then only have Fannie Mae, Freddie Mac and FHA as options; so besides the required down payments all three of the lenders have similar requirements.  So if you are denied by these lenders: so sorry; no loan for you!

 Think that’s bad? O it gets worse.  With all the homes racing into foreclosure, those properties returned to the lender are being grossly mismanaged.  Very few are occupied or even have a for sale sign.  Potential home buyers are less interested these days in purchasing a rescued property with the great deal homes up for sale. Additionally, investors are unable to qualify for homes due to the homes current state and market value.  This leads to a eventual decrease in the property’s price further depreciating the neighborhoods value.

 And if that wasn’t enough, these homes don’t qualify for assistance from the FHA financing commission.  In the current marketplace, the FHA’s requirements to obtain financing are more lenient than it has ever been.  But the FHA does have fairly strict guidelines for property standards based on lender owned homes.  With all the free money handed up by Dear Mr. Obama, we need regulations put in place to get the foreclosed properties in order! Instead of the strict guidelines put in place by creditors, these homes need their Loan Modification to be handled with care and attention.   Being in the industry since the early 80’s, I’ve never seen the market this strict.

What can we do? Reach out to your congressman. Tell him or her that we need regulations that will force lenders to start doing the right thing with their foreclosed properties. We need them to be more agreeable to modification requests.  We need policies that will require lenders to modify loans when the numbers clearly indicate that a home can be saved with a temporary payment reduction.

I know that as much as I rant about this, most people will not contact their local representatives.  So I have decided to draft my own proposals.  I plan to put my proposals into the hands of every congressman and senator in Washington. If you agree with my views, won’t you join me?  I’d like to include as many signatures as I can get with my proposals. If you provide your contact info, I’ll send you the proposals and when we’re ready to go, I’ll ask for your signature.  But it’s completely up to you… you can read my proposals before deciding to be a signor.  But I believe what I present will make sense and you will want to join us.  I’ll keep in touch with you until then.

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