How To Get Home

Ever notice how the nightly news is pretty negative? I understand there are a lot of problems in the world and that the networks have a responsibility to report that news. I also understand that people slow down to look at car accidents. Truth is, bad news sells and bad news keeps people from changing the channel.

It has become so bad on the network news shows that at 6:55pm, they give you the warm, feel-good story at the end to help you sleep better. A good example of the press focusing on the gloom and doom is the recent coverage of the subprime meltdown and the resulting foreclosures. Putting a camera on a single-mother of three as her house is auctioned off serves what purpose?

Predatory lending, evil loan programs, and greedy lenders are the bad guys. How could this all happen? Let’s have some Congressional hearings and get to the bottom of it. With home ownership at record levels (69%), many Americans are now responsible for a mortgage that might be more than they can handle. The problem is being blamed on:

1. Lack of regulatory oversight of mortgage lending to high-risk borrowers

2. Aggressive marketing of complex loans to high-risk borrowers

3. Poor financial decisions by high-risk borrowers

Roger Cole, head of the Federal Reserve’s banking supervision division acknowledged, “I will say that given what we know now, yes, we could have done more sooner.”

Under pointed questioning from Sen. Christopher Dodd, Cole promised to put in motion a process at the central bank that could lead to a broadening of federal rules governing mortgage lending standards.

So what are we looking at as a result of the bad lending practices? There will be more foreclosures. As a result of the tighter credit standards now being enforced, there will be fewer home sales. It is not the end of mortgage lending or home buying by any means. It is the beginning of more responsible lending and more realistic pricing of homes in order to sell them.

Much will be said over the next few days as a result of the slowing sales. There are several indicators that will tell the story of how the economy is reacting. Let’s try to focus on the facts and find the opportunities that are created as a result. Lower homes prices, plenty of inventory to pick from, and motivated sellers will provide buyers with a very positive opportunity.