Tuesday, March 10, 2009

Foreclosures


Today's photo is of a foreclosure sale I attended where close to 300 homes were auctioned off in 6 hours.
I have been a Realtor for 20 years. I have tried to be a Realtor with a consumer affairs attitude, educating and working on the behalf of my client. I don't agree with what I am seeing in the real estate market today. We are currently bailing people out of financial distress with mortgage assistance. Let me explain, (although granted, this is a simplified version).
In 2005 FannieMae and FreddieMac were told to get more mortgages to underprivileged areas. They did, but to do so, they dropped common sense things, like you have to have a downpayment and actually be able to afford the house payment. Being politically correct, they didn't limit it to "underprivileged areas" they did it across the nation. Even then, over 4% of new buyers didn't make the first payment, as they had "payment shock".
Now, about 12% aren't paying their mortgage and we are saying "poor you." The current administration passed a housing bill to have banks refinance the loan AND in some cases reduce the amount owed. So, for those folks that live in areas where the homes went from $300,000 to $200,000, the bank is expected to "write off" the $100,000 loss (except they are not writing it off, they are accepting the stimulus money). Bottom line, you and I are paying for this through our taxes.
Here's the bugaboo. The housing bottom isn't here yet! When the housing bottom does hit, then what? Are people going to want another "poor me" bailout?
This enables folks to not accept responsibility for their actions. Although we all know people who try to take advantage of the system, I believe most of the people in this situation made the best decision with the information they had at the time. The problem is, it now proves that it was a bad decision. Don't "throw good money in after bad", get out now, let the market take it's lumps and move on. We are delaying the inevitable and it's going to cost us dearly.
As for the consumer, I am empathetic to their plight. I know losing your home causes great personal angst. However, I also know, staying in a home you can't afford becomes an albatross, instead of a place you find solace and comfort in, you despise it and that albatross spreads like a cancer to other parts of your life.
I am confused on just who we are "helping" here, it's not the homeowner in trouble and it's not the economy.

No comments: