
Courtesy of Yahoo/Zillow
Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last fifty years and has become a common investment vehicle. Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more complicated than investing in stocks and bonds.
Speaking about mortgages, for over two years the National Mortgage Complaint Center have been warning that if a very greedy mortgage industry was allowed to continue with ridiculous mortgage products or programs, at some point the entire economy could be put at risk (which happend today). The last two weeks of declines on Wall Street are but one indicator that the self-inflicted damage to the economy has started. According to economy experts, “things are about to get much worse”. Nevertheless there are four simple tips for consumers or industry insiders to prepare for the next turbulent years of record real estate foreclosures and Wall Street mayhem.
1. If you have an “Option Adjustable Rate Mortgage” try to see if your current lender will assist you with a conversion to a more stable fixed rate product. Ridiculous mortgage product should have never been offered to the average consumer and that is why we came to this point with the subprime issues and all that.
2. Homeowners who purchased in 2004, 2005 & 2006 may literally have no ability to refinance their home if they used 100% financing. In many regional or local real estate markets prices have dropped 10% or at best prices are flat. If you do not have to sell your home….. don’t. If you can no longer afford your payment attempt to do a work out with his/her/their lender. For many consumers a “deed in lieu of foreclosure” might be your best option if your lender is not willing or able to do a work out.
3. Home Builders need to get out of the home lending business. Aside from inflating appraisals, homebuilders have been gouging consumers with undisclosed yield spread premiums for years. The mortgage industry is currently being crushed with calls on non-performing loans. Homebuilders could be next. What will homebuilders do when Wall Street comes knocking with pay back provisions for non-performing loans. Appraisal fraud in the home building industry is a massive national problem that has received little to no attention.
4. Consumers with investments along with pension fund advisors need to wake up and examine their portfolio. Wall Street Investment Bankers are largely to blame for much of these problems because they either financed it, or they put the deal together. While much of the mortgage industry is going down the tube, Wall Street Investment Bankers are recording record profits. What is wrong with this picture?
Wall Street was apparently totally shocked these past weeks especially after the Labor Department reported that 63, 000 nonfarm jobs were lost last month….As Reuters points out, the problem is that Wall Street experts had expected that 25,000 positions would actually be added…More and more experts are now saying the U.S. is in a recession, official or not. And, the worst is yet to come. There will be still more foreclosures this year…many more. The credit markets are getting tighter despite Fed action. And, consumer confidence continues to go down. Is this to refer to a subprime mortgage crisis or shoud we just agree that this is a financial crisis, period ?
Sung Un Cho
Business Account (US-Italy) and Blog Administrator
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