For those of you who have attempted and hopefully succeeded in financing a home I bid you congratulations. Home ownership has long been a cornerstone of the “American Dream” and is very prominent within the U.S. tax code to assist in its implementation. All things considered it is a good thing to own a piece of the earth and more importantly to put a roof over your families heads.
Of course for those economically concerned, the home market has been the key driving force which fuels our GDP as the tentacles from each house spread out geometrically to virtually all sectors of the economy. A boon no doubt and needless to say the reason we are in the quagmire is due to a lack of home sales and diminishing ownership.
You ask how can this be with historically low interest rates and all. It is really very simple that. We have been inundated with new rules and regulations and a fee structure which continues to rise almost daily. If that were not enough the investors who purchase the mortgages are literally afraid of their own shadows. Of course these serve only to slow progress not enhance it. Take it from one in the industry, I kid you not I have not seen the likes of this ever in my 30 years and that includes the S&L debacle. On the contrary that worked out quite well but as I have stated before we had adults in charge when that event occurred and was quickly resolved. Today we could not be further from same as this correction has been horribly mishandled across the board.
We are literally freezing the market with endless paperwork and hurdles for even the best of the best and I see no one gaining from this whatsoever. I do see us all losing however. This must change and quickly friends.
What a paradox, nay conundrum we have. I for one wish there where less Washington involved for starters. They truly are an impediment to freeing this market and acceleration in GDP. But as mentioned before they have no business expertise so what should I expect to the contrary? More brain dead policies?
As a long term veteran in the industry I see no reason to not continue the good old fashioned way utilizing common sense underwriting when reviewing a loan. We know we did this from the 50’s to 2001 or so and through that time FNMA quality product averaged a default rate of 1%. Pretty damn good if you ask me. Then the funny money craze hit and defaults range in the 15%+ range. I could be wrong but 50 years of good experience sounds better to me than what I live with daily today.
And please to naysayer I am most definitely not advocating a return to subprime style lending as I personally never touched one as it was pure dynamite waiting to explode. I am still surprised that genius Dr. Greenspan promoted them but that is for another day.
So I submit we go back to a simpler time and use our logic and common sense. We must free up the roadblock that is modern lending post subprime. Only then will the markets absorb the excess capacity and job growth will most definitely return.
And finally please stop turning to Washington for help. After all they started this mess, they certainly have no answer for it.
Article first published as <a href=’http://technorati.com/business/finance/article/how-to-free-up-the-home/’>How To Free Up The Home Mortgage Market? </a> on Technorati.