I Just Don’t Get It….

I just don’t get it. I am really trying. I think things are getting better but there is this nagging feeling in my gut that my head is lying to me.  Interest rates are under 4%, prices are lower than they have been in years, the unemployment rate has dropped for a couple of months in a row, the stock market is higher than its been in almost a year and I just read a stat this morning that builder’s confidence is higher than has been in a long time.  That benchmark was 29, which they say is a high-mark. The only problem is, that to really show a real improvement the benchmark should be “50”!! I think they got a ways to go. And they are not  building single family homes like they used to. They are building apartments. I guess that’s good….? Explains all the rental calls I am getting.

Customers are showing up with stats from Zillow on what they think the prices should be on offers that they make. Not making the sellers very happy. Just go take a look at your own house on Zillow. See how that makes you feel.

The other thing I don’t get is all this lack of compassion for folks having a rough time paying their mortgage.  “Shouldn’t have bought the house if they couldn’t afford it.”  I wish I had a buck for every time I heard that.
You know this recession, or depression depending on your industry, hit a lot of folks pretty hard. Maybe they were doing okay to pretty well and either he or she lost a job or maybe one of them got really sick and couldn’t pay all of their medical bills or maybe they had to move to keep a job or several other lousy situations that play havoc with a family. People have had to make hard decisions to feed their families. I know some of them. They lose their job, they lose their health insurance. Do you have any idea what it cost to have health insurance? Even with Cobra,  the cost is ridiculous. If you are fortunate enough to have an employer pay for it, hold your breathe,  its not going to last forever. People have had to make decisions. The house or food. Don’t get me wrong, I am sure there are folks abusing the system. Strategic default or walking away. Lets see, I bought the house for $250000, its now worth $150,000 and I owe  $175000. And the taxes are 5000 a year.  The hell with it, you can have the house back. That’s what it says in the contract, you don’t pay, you give the house back. Full compliance with the contract. Now what the buyers need to know is that they may have a judgement recorded against them for the difference of what the lender sells the house for  and what they owe. Not a pleasant thing to have chasing you every time you try to buy something on credit.

Commercial business stategically default  when they feel its necessary. Most of the time they have no qualms because they have not signed personally to gurantee the loan or lease. The company has no problem. They file bankruptcy if it gets too bad , but personal assests in most cases are protected. Just snoop around you will find all kinds of companies who walk away. Its not morally right but as  I have heard a million times “Its business”.

Foreclosures are bad for everybody. The homeowner, the lender and the neighborhood.  Why can’t  the lenders come up with something other than foreclosure in the interim to help honest folks who are having a setback.  I have heard of several government options. Guess what, we all know how successful that has been. I don’t get it… for example one thought I heard was; drop the principal to reduce the payment so the folks can stay in the home. Keep the neighborhoods solid.  This isn’t forgiveness.  The homeowner has to stay for a period of years and then if they sell in a rising market the lender shares in the profit or takes it all. Kind of a reverse mortgage in reverse!!

Senator Menendez from New Jersey has proposed this very plan. Click here to get the run down.

Lets get underwriting criteria back to something reasonable. Having more than 2 or 3  months worth of mortgage payments in reserve is silly as well as unachievable. Use what an applicant can pay based on what they earn not on 20% down payment.
That house  you live in, someday you are going to have to sell it. If its worth $200,000 and you need 20% plus closing costs,  a prospective buyer will need $50,000 to do the deal. How many folks have that kind of cash sitting around?  And if they do, why would they put it into a house? If I can get in for 3.5% down and keep $40000 + in my bank and use it for my kids education or my retirement why wouldn’t I do that? Also that $40000 might come in handy if I need a new roof  later or septic system. I just don get it…

I had a settlement with my son several years ago when he came home from the Service. He bought a 2 unit. Lived upstairs and rented downstairs. He used his VA eligibility. It cost him 0 dollars, nada, nothing. Because VA said he could. He still has that 2 unit which he now rents to two tenants and bought another house for his family after he got married. Who out there is going to be the one to tell our veterans that they can no longer buy a home with no money down. Not me.

We have just got to stop this blame game. It is what it is. I certainly don’t have all the answers. But at least I can ask some questions. Unless you are deaf, blind and just plain obstinate,what you see at the gas pump, grocery store and at the doctors office should make you pause and think. How long can we keep paying  for this stuff? That’s what families are coping with everyday. If you are lucky enough not to have to worry about this, hit your knees and thank whomever you pray to for your blessings. Let’s be reasonable and work on this together….otherwise I just don’t get it but its only my opinion.

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