Tuesday, April 19, 2011

Was Home ownership for all really the goal of the lending institutions?

An interesting point regarding the ongoing financial crisis

is explored in "All the Devils are Here" by Bethany McLean and Joe Nocera

in the latest issue of Realtor by the National Association of Realtors.

The authors debate the notion that "home ownership" had everything to do with this crisis plaguing the global economy today.

In a nutshell:

With all the confusion permeating the real estate market over the last 5 years regarding foreclosures, bank owned properties and short sales it has often been said that sub prime lending and policies created by Fannie Mae and Freddie Mac were in the name of giving everyone a chance to be homeowners. Yet, as we know, a huge percentage of sub prime loans (75%) were refinances not purchase loans. These loans had nothing to do with "home ownership" other than the fact that the borrowers used the real estate as collateral to obtain the loans.

This refinance money was used for many purposes that had nothing to do with real estate and homes. Refinance loans were used to pay off credit card debt, purchase vehicles, finance college educations purchases of furniture and other consumer products.

So, in essence, the refinance loans were used to fuel public debt and consumer spending , not promote home ownership.

These are interesting thoughts that deserve consideration as public policy will be formed in the coming years regarding the mortgage industry and the role of government regulation in protecting the economy and the consumer. Lets hope we can all take a leadership role in formulating policy on the local and state levels first. We all need to be involved. Send an email or letter to your local politicians and leaders today!

Anyway, some lessons to be learned by all of us are the lessons taught over and over to many of us in grade school through high school, by our parents and church leaders:

1. Money doesn't buy happiness

2. Greed knows no bounds

3. We can live quite happily on alot less

4. Taking time to smell the roses and be thankful for what we do have can be a very therapeutic experience

5. There is great power in communicating our thoughts and concerns to our local and national
politicians on a regular basis.

and last but not least,

6. Home ownership is a good thing. Home ownership has enabled many Americans to provide a great future for their families and finance their retirement years by building wealth over a long period of time. Long live Homeownership!!

The challenges our country faces are enormous, yet I believe we are up to the task, as long as we all chip in and help!

Your thoughts?

Best regards,

Carla Brooks

PS photos courtesy of www.freedigitalphotos.net and

PPS If you or someone you know would like to purchase or sell a home call me today for expert real estate assistance. I am here to earn your business and I treat every transaction as if it were my own!

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