Great article. I also agreeGreat article. I also agree that although most numbers are national and each market is different and our local (Miami/Miami Beach), market has been recovering, it concerns me greatly that lenders are slow to add their current REO inventory to an already handicapped market.
This is exemplified in our local market by the 30,000 or so new condo units built during the boom, which have been turned into rentals in order to help these builders from being foreclosed on which helped us from experiencing a much worse real estate market situation and a deeper collapse of our local economy while helping keep rents low since a lot of that inventory remains available.
In combination, they reflect exactly the great news for us. It is no secret that the inventory levels are high and that we would certainly be in much worse situation if all the REO inventory were revealed.
As depressed as the market already is and will continue to be, gaining consumer confidence and allowing them the opportunity to own real estate at prices and payments they can afford long term is good news for many buyers (investors who can finally enjoy cash flow and appreciation and first-time buyers who can often buy a better home at great prices and rates).
Yet, it is also no secret that many ARM and Option-ARM loans are reseting in 2010 and 2011 and that defaults within these loans and even Alt-A and A paper loans are already on the rise and set to peak in both of those years, and that this is likely to add tens and even hundreds of thousands of new REO properties to the market.
Wanna-be investors will be the biggest losers. Those who bought property with the intent of "flipping" them and got caught holding the bag.
First-time buyers who got greedy or felt their chance of homeownership would pass them by if they did not buy then, are also in a bind, just as are those who took out additional loans against their existing home in order to "invest" (using the term loosely since what they did was not actually "invest" but gamble instead), buy property that they could rent out or flip and be finally rich.
The sad part of this story which no one is talking about is the greed that continues to exist within the walls of the board rooms of all the major banks and Congress.
Here are the individuals who let it all hang out and either created, facilitated or even encouraged the behavior we are all now suffering from.
Banks lobbied to have the GSEs loosen their requirements, the GSEs, in the interest of growing the economy and the well-meaning desire to improve homeownership to everyone, took the eye off the ball as did the politicians that failed their constituents by not plugging loopholes or creating backstops and even not forcing enforcement agencies like the SEC to do a better job at ensuring the financial instruments that were then sold as "A-paper" weren't so loosely-rubber stamped and sold to others around the world. These in turn, trusted the name of the institutions who "supposedly" had the understanding of what was being rubber-stamped as A-paper and allowed themselves to be sold, with understanding that these carried the "good-faith and credit" of the underlying institutions, the USA (implicitly), and the assets (which turned out to be liabilities).
These instruments were cashed in to create more cash for the banks and other lenders who created more cash to lend and continued to devise program after program to promote lending products using wrong data and loose assumptions and helped fuel the frenzy we experienced.
In addition, and although nobody put a gun to the heads of those who signed the dotted line and assumed the liability of the loans they applied for, neither were the banks forced to underwrite and lend to many unqualified individuals but were instead encouraged by their own greed and the greed of wall street added to the greed of the people who borrowed.
This is where Greenspan summed up the entire period by saying (paraphrasing) that greed ran through the entire spectrum of what took place, at all levels.
Still, the lenders today are after the borrowers that the lenders themselves should have never pursued or lent to by often seeking deficiency judgments against these borrowers, keeping the short sale process slow and handicapped, forcing many to lose their home to foreclosure, only to then sell the asset while still recovering from insurers like those with PMI, MIP, FHA and/or VA backed loans.
From the top down, this entire process needs revision NOT FROM THE BOTTOM UP. Those at the top have all the College graduates, post-graduates, PHD's and systems and analysts at their disposal dropped the ball major!
Those who can afford to buy these distressed properties stand to gain immensely. Those loosing their homes are being penalized dearly.
What is happening to the institutions and politicians that failed us? Who's asking them and investigating this all the way to the top? Only CNBC's David Faber made the best attempt of all so far. He and others need to carry the ball the rest of the way and ensure that TRULY, WE NEVER see this behavior again (although this may only successfully happen when greed is removed from our DNA).
In addition, problems related to new lending guidelines are stifling our ability to sell condo inventory since many buildings are facing financial doom. Not only do borrowers have to go through a wringer, but condo buildings also must qualify and this remains a problem.
Not dropping the tax credit (as they did the credit for buying cars which caused sales to drop again), but expanding it instead in order to encourage more to buy real estate, improving the employment situation so that those on the fence because they are unsure about their future can finally decide to buy and those who finally start to be employed choose to take the plunge as well, coupled with fair lending practices and guidelines that will allow inventory to be financed with sound loan programs are key to our recovery.
Just as important is not adding to our deficit or national debt with programs that do not help improve our nation in the areas of housing, consumer confidence and spending and employment.
Wenceslao Fernandez Jr, BS, Realtor, CDPE
Certified Distressed Property Expert (http://www.CDPE.com)
Keller Williams Realty Miami Beach
Serving Eastern Miami-Dade & Miami Beach, Fl
Seach Florida Properties in YOUR language: http://www.Immobel.com/MiamiRealEstateKing
http://www.ISellMiamiBeach.Info
Mr. Rich S (HI), I'd like toMr. Rich S (HI), I'd like to invite you to visit http://www.CDPE.com to find out What is a CDPE and how can one of these experts help you with your situation in HI (we are almost 12,000 strong and there are several in HI).
If the result of your investigation and consultation with the professionals Bernice suggested leads to a property sale solution (i.e.: Short Sale), hiring a qualified Realtor (remember - only members of the National Association of Realtors who adhere to a strict Code of Ethics can use the term Realtor), who is additionally trained in matters relating to Distressed Property Sales as part of your team will be
key to your success.
All the best and remember that Luck, Is When Preparation Meets Opportunity.
Taking Bernice's advise, you can prepare to meet the many opportunities this market offers.
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Wenceslao Fernandez Jr, BS, CDPE
Certified Distressed Property Expert (http://www.CDPE.com)
Keller Williams Realty Miami Beach
Serving Eastern Miami-Dade & Miami Beach, Florida
Seach Florida Properties in YOUR language: http://www.Immobel.com/MiamiRealEstateKing
http://www.ISellMiamiBeach.Info
