Foreclosure and REO Properties Expert Advice

With Real Estate Values Dropping, A Readjustment of our Values.

Reluctantly…

I attribute our current downturn in real estate values and the surge of foreclosures to short-sightedness and a pinch of “greediness”. 

• Overly zealous developers, catching the wave, continued to develop without consideration to future demand. 
• Municipalities approved subdivisions after subdivisions because it was good for the tax base, but did so without consideration to the overburdened roads, schools, and public services. 
• Aggressive mortgage brokers put first time home buyers into adjustable rate mortgages, often with too high a loan to value. 
• The mortgage broker was joined by the real estate agent advocating the escalating home values and the opportunity to “own a piece of the rock”, without thought or consideration to their ability to pay in the future. 
• Realtors and homeowners priced their properties for sale above the true market value because they could get their asking price.

We are not seeing a readjustment of property values, we are experiencing a readjustment of our values - based on greed and the notion of making a quick buck.  

Brace yourself. 

We are in for a ride of readjusting our greed factor.  Lenders, having seen their errors, are now raising the bar for qualifying. 

As a result, we will have fewer financing options, fewer people being able to buy the homes in foreclosure from those that effortlessly slipped over the bar in the past. 

The foreclosure rate is at a historic high and it is only going to get worse in the coming years. 

Developers are offering cars, closing costs, and vacations to induce buyers to bail them out of their inventory that isn’t selling. 

Public officials are battling budgets in an effort to overcome their shortsightedness and passing the burden onto their already overtaxed constituents. 

Sound ugly? 

It is… but I hate to say it… we deserve it. 

I’m not pointing my figure at one group of people; we all decided to join the game.  There were a number of economists, real estate organizations, and governmental officials that saw the wave, the tsunami, coming but were unable (or unwilling) to slow down the “feeding frenzy”. 

In their defense, lets be honest, the escalation of the real estate market was the solution to a lagging economy and we turned our head because it was a great temporary fix.  The good news (and the bad news) as with most ills, they finally correct themselves.

This is not an issue that can be resolved at the micro level. 

As Federal Reserve Chairman, Ben Bernanke reported, “a comprehensive plan needs to be put into place…. this cannot be addressed on a ‘onesey-twosey’ approach.” 

Collectively, all parties (that stimulated the problem) need to work together.  It is more than offering creative exit strategies or reasonable modification plans. 

It is more than offering “great deals” on distressed properties. 

It is more than passing legislation that offers rebates to the consumer. 

This problem mandates the cooperation of realtors, lenders, government agencies, and the property owners themselves to create a comprehensive plan.  Otherwise, the“short sale sharks” will multiply and feed from the bloody waters for their benefit and not the benefit of the whole. 

The lenders need to create a comprehensive plan to address problem loans before they reach the foreclosure stage by retaining experienced workout specialists.   In addition, lenders need to do a bit of damage control and turn this foreclosure crisis into a positive by casting a positive PR image on the way they are handling the situation. 

Collectively we need to focus on strengthening lagging communities by building stronger, more resilient economies, create jobs in areas with low vacancy rates, and offer alternatives to property owners hit hardest by unstable lending practices. 

Our goal should not be to take our hits and resale a home at a loss but to lesson the blow by doing whatever it takes to keep the property owner in their home.  In either case, compromises will need to be made, sacrifices taken, but in the end, what is the right thing to do?

Unfortunately, the fact is that a lot of people are going to get hurt… and hurt bad.  My sympathy goes to those on fixed incomes, especially the elderly, and the hopeful first time buyers that just wanted a chance at owning their own home; they will pay the price dearly.  This is the segment of our population that will feel the pain the most from our greed. 

Be fair.  Be reasonable. Be nice.