It's funny how the Realtors weren't complaining when all of their houses sold. And they made five to six figures a month. But now that things are more difficult, the people that approve the loans are at fault.
We went from one extreme to the other but it needed to be done. There are mortgage professionals closing 20-30 loans per month. And Real Estate Agent closing 5-10 per month. There is still money to be made in this business. The strong and determined will survice. The weak and brittle will not!
Some will learn, some won't. We're in an era where homeownership is a privilege to those who earn it and not a right (remember when they told you that about your driver's license?)
I hope Barney Frank and Chris Dodd are paying attention!
I think people who have had short sales and foreclosures... some will learn big lessons and never do it again. Others will repeat this behavior, always blaming someone else (the lender gave me too much money, the realtor told me I could afford this house, the appraiser overappraised the house)...
Current FHA guidelines say three years from a foreclosure (short sale is treated same as a foreclosure) AND it was due to circumstances beyond their control. All the reasons used for the short sale hardship letters are going to be very relevant again. Have your clients save their hardship paperwork and any supporting documentation they may have. It's going to take preparation and discipline for these folks to re-enter the housing market.
Strategic foreclosures (short sales) who didn't truly have a hardship they can document I think will be very surprised when they apply for their next home loan and can't support the "circumstances beyond their control".
I did a post on my website with a success story.(see the link below)
There will probably be a lot of credit repair and credit management necessary to get these folks
"qualifiable" (?) and the time to start is now and not waiting until they are ready to submit an offer.
These people need legal counsel from day one that bankruptcy is likely the only RELIABLE outcome for their situation. Only those states that disallow deficiency collection provide adequate protection to the borrower.The lender in these states then are caught in the snare of their deceit and refusal to negotiate in good faith. Short sale places the borrow in a state of financial pergatory for up to 17 years. Why are real estate professionals pursuing this solution, building their business on this solution, when a successful outcome is rare and the long term benefit to the borrow possesses only a vapor of reality?
There will be a very large portion of the citizenry who will have credit blemishes such as bankruptcy....a VERY large population. This population of citizens will not be neglected. Banks will create credit products to bring these consumers back to the market place. Actually the banks are doing this NOW for those who have recent bankruptcies. However, an outstanding deficiency claim, can keep these citizens from entering into a viable maketplace for the next 20 years. Stop the short sale insanity!
There will still be buyers and sellers. Real estate professionals will still make a living. We are not, however, compelled to contribute to the long term carnage to be created in the wake of short sales. Stop the insanity!
I hate to think what our future is going to be with so many people filing Bankruptcy. I think the young professional lawyer should definitely be going into Bankruptcy law, (unfortunately)!
I wish your crystal ball had not broke... we really could use it these days.
I am wondering if new guidelines will be put in place for them. Perhaps making them have a co-signer or more down or demands of always keeping additional funds in savings.... mmmm. I am just thinking that is going to be another big issue coming at us soon as we start to see some trickle back into the market.
First of all a lot of those people never had any business what so ever getting a mortgage. The only reason they did was the incompetence of lenders and the stupidity of AIG. So, an awful lot of them will not be coming back into the market.
However, there will be a lot that do qualify and when the economy gets better prices will go up again. There will be more bubbles, bit no one knows when the next one will be.
I am already working with sellers who are able, to offer the options of carrying the note for a while. That way the buyers can get back in a home sooner and get themselves re-established. They can work on their credit, get job stability behind them, and then refinance.
It will be interesting to see what actually happens. I keep telling everyone from Sellers to Buyers, my crystal ball broke last year and I haven't found a replacement yet.
Many of the rest will be unable to come up with down payments. I doubt a large percentage will do very much to get better fico scores.
Credit standards will be a lot tighter. IF the GSE's are really put out of business as Barney Frank is suggesting now, a lot of normal lenders will NOT accept people with that kind of credit history.
About that time, many of the loans made that seemed good today will be defaulting due to far to easy lending even in 2009. That will bring in more foreclosures.
The only real answer is no one can see that far ahead for only one reason. Governmental interference and changing the rules could mean anything could change that a realistic assessment would be based on. Without that interference, I suspect banks that had to hold onto any mortgages they make will not allow those bottom line killers to take another shot at costing the banks even more $billions.