Foreclosure crisis 'is like Hurricane Katrina'
Panelists discuss how homeowners, lenders can reduce losses
By Inman News, Thursday, July 24, 2008.Bookmarking Sites
SAN FRANCISCO -- The massive waves of foreclosures have bogged down the nation like a natural disaster and require a large-scale response, said Frances Flynn Thorsen, managing editor for the RealTown.com online community.
"This crisis is like Hurricane Katrina, and in order to save it, we all have to come together like people came together for Katrina," said Thorsen, a panelist during a Foreclosure Workshop session on Wednesday at the Real Estate Connect conference.
Thorsen was joined on the panel, "Relationship 2.0: How to Help Homeowners While Closing Business," by Eli Tene, president of I Short Sale Inc.; Heidi Mueller, broker associate of Prudential California Realty; and Tom Geller, author of "Save My Home: 10 Steps to Avoiding Foreclosure."
Panelists shared their views on how to handle the foreclosure market and what steps to take in order to prevent clients from losing their homes.
"Some people have to realize that a home is not a stock. A home is a place that people live in, but many think homes are stocks," said Thorsen. Too many homeowners purchased property seeking quick profits, she said, and recommended that buyers plan to keep their homes for more than four or five years.
Tene said that short sales can benefit both lenders and buyers, as buyers can get a fresh start and lenders can save time and money by avoiding a full foreclosure process.
***
What's your opinion? Leave your comments below or send a letter to the editor.
All rights reserved. This article may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this article without permission is a violation of federal copyright law.
You must login or register to post a comment.
Submitted by Margie OCampo de Castillo on July 25, 2008 - 12:24pm.
If the bill Bush signs allows financially troubled homeowners to refinance into fixed-rate loans so they can afford to stay in homes that have gravely depreciated in value vs. having them walk away, it will help....but something still smells bad, in my oppinion.
• Lenders already have the power to change the terms of a loan. Why then are they dragging their feet with many homeowners? to Why are lenders dragging their feet and not doing this already?
• Based on the experiences of several clients, it appears the guidelines Lenders are using to determine who is foreclosed on and who gets a loan modification are skewed.
o One client with perfect credit and timely payments calls Lender to say work is slow and income is suffering to a degree they feel they may not be able to make their payments in the future. They want to have their original teaser rate fixed as this payment is one they can afford to continue making. They are told that they can only help folks who are already behind. If it were my money, I would put it on the this guy as he has proven that he pays on time vs. someone whose credit reveals irresponsible purchases and lack of discipline when it comes to payment history.
o I know Lenders are not in the business of being Landlords, but it makes more sense to me to lease these properties out to the occupants at a discounted amount vs. having 20+ foreclosed homes in a neighborhood. I know….It’s never been done before, but when have we been down this particular road before?
My concern is that despite good intentions with these stimulus programs, we may be creating false consumer confidence which can produce a bubble in itself. We Americans are innately optimistic, never wanting to alarm the nation and cause panic. But this is a "perfect storm" if there ever was one! There's a laundry list of components feeding on one another & continuing to breed additional debilitating blows to our economy. The housing package will help some, but in my opinion, when money is tight it has to be spent wisely by identifying and fixing the problem vs. throwing our money on treating the symptoms. We shouldn't kid ourselves. Housing is just one failing pillar of our economy and I'm not sure we the tax payers have enough money to fix our Housing Crisis.
The "perfect storm" is being felt worldwide. Here at home we are weathering one wave after another. We hear unemployment is nearing 5%; the money supply is tight (the so called credit crunch); credit is hard to get; giants like Freddie Mac and Fannie Mae are falling; assets are depreciating; the cost of basic necessities & staples is rising; in contrast, wages are NOT rising; consumer confidence is at an all time low; the cost of gasoline at record highs and climbing; little to no economic growth; the Dollar is losing its value; a record number of businesses large and small close their doors as they no longer can afford to stay open; chains closing their shops and malls feeling the pinch; record foreclosures and more to come; relentless Mother Nature at work worldwide; global warming threatening the world as we know it; the cost of war bankrupting our nation; the price we are paying for the lack of immigration reform laws....... be my guest and add a few of your own. Can anyone remember when any country has weathered this myriad of challenges?
As a REALTOR it may not be popular to say that Homeownership is not for everyone but every homeowner can agree that Homeownership should be entered into with a great respect for the responsibility that comes with it and it’s imperative that we arm ourselves with the understanding/knowledge of the financial commitment required to sustain that property besides just making the monthly mortgage payment.
In light of the horrific amount of homeowners being foreclosed on, it is fair to say that the EZ Money solution was worse than the problem it tried to solve in the first place; increasing homeownership. What happened to the value and priority folks placed on homeownership? The EZ Credit and EZ Money mentality blinded our country with excess and dulled what little common sense we had to begin with. Our forefathers believed in budgeting and saving up for things that were truly necessary, while we place so little value on the basic needs and carelessly spend on mere luxuries.
I am in the American Dream business, but as a REALTOR® I am the first to say that EZ Money and EZ Credit loans are not the way. We need to increase homeownership responsibly and financial literacy education is paramount. In a perfect world it would be taught in schools, but the main responsibility falls on us to teach those around us, starting with our children.
What good is handing out loans for the privilege of homeownership if the recipient does not comprehend its value? EZ come, EZ go.
The compounding effects of this storm are crippling our economy in such a way one can only wonder how and when we will recover.
Submitted by Wenceslao Fernandez Jr on July 25, 2008 - 3:20pm.
Well put Margie. We have become an EZ (or throw-away) society. It's to EZ to mess something up, not be held accountable, then be allowed to play the game again.
Yet, a balance must be struck to allow folk who really need help get it.
Short Sales do help people in need and so far, I've been able to do that, while averting those who simply don't want to get stuck with a bill they don't feel is fair.
The funny thing is, I also find that often, the folk who feel uncomfortable making payments on a property that they owe more than its worth, are the same folk that seem to gladly make payments on a car purchase, while being upsidedown on their car loan for most of the loan period (say, 4 out the 5 years).
What people need to get back to thinking is about the fundamentals of homeownership, rather than giving into their fears (oten unfounded and only spread by biased media reports).
While the market is definitely difficult in many areas (like where I am, in Miami, Florida), there are sales taking place. These properties which are selling may be selling in a short sale situation, but even those not selling under duress, are able to then find true bargains when they turn around and buy.
These savvy folk are buying more property for less, at still low interest rates. Whatever money they may have lost (on paper) in the sale of their previous home, they're making up in the purchase of their move-up home.
With tax portability now a reality in Florida, buying real estate is again, a great investment. Just watch the stock and commodity market swings to guage how quickly wild things can get in equity markets.
Most experts agree that things will look different for real estate in 5 years. If you buy today, chances are that in 2013, you'll be wondering why you didn't buy more real estate back in 2008.
Again, the fundamentals are there. Real estate is a hard asset that over time, will more than likely not dissapoint. It has been like this for many years, and it is likely to continue to be a great investment over time.
Where else can someone buy an investment, finance it with loan ranging from 70-97% of value, at low interest rates? This often allows a return on cash much greater than any other holding in an investor's portfolio.
With the right professional Realtor in your team, hopefully one who is a Certified Distressed Property Expert who's able to guide their clients through all the issues from the moment they see the house, until after the closing, there is no reason a buyer today would not be totally satisfied and thankful.
Remember, luck is when preparation meets opportunity. How are you preparing to meet yours?
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.