Orange County Sweet Digs

July 30, 2008

Foreclosures – Taking a Hard Look at Both Sides of the Issue

What’s happening with the foreclosure market has caused quite the mess in California and the nation at large. This misfortune of many folks losing their homes has spun the Federal Government into a “let’s save the people type of mode.” But here is something that is really scary, there are quite a few people out there that believe that these individuals in foreclosure should not be saved. Yes, as harsh as it sounds and is to some extent, many folks, particularly hard to the right conservatives, put the blame solely on the buyers. I have heard many conversations, seen several interviews and have read quite a few articles where people just aren’t buying into the whole predatory lending deal. “You should have read the fine print,” many have stated. I am not saying that I am one of these people. I do have sympathy for the massive amount of people that have lost their homes, but this blog is here to say there are those that don’t.

2007 10 24 glenn beck Foreclosures Taking a Hard Look at Both Sides of the Issue

Glen Beck, of CNN Headline News is one of those people. “Using public money to help out a private situation is insane,” stated the host of his own radio and evening news show. For  people that understands government and the economy, they will find some level of truth to his statement. (Side note: He also feels that Barack is a Socialist, there is some level of truth to that as well.) Of course, Glen Beck is a right-wing type of fellow and thus his remarks are not too surprising. Never the less, his views are widely shared.

tomleykis 1 Foreclosures Taking a Hard Look at Both Sides of the Issue

Tom Leykis, (small L Libertarian and registered independent) controversial radio talk show host of the “Tom Leykis Show,” is one of the most financially savvy individuals around (and a certified genius) and you could not pay him to give an ounce of sympathy for people who are losing their homes. “They’re all idiots, they should have paied a real estate lawyer to read over their contracts if they did not understand them.” The problem with this statement is that it is highly idealistic and does not take into consideration that real estate lawyers cost a pretty penny and the buyers may not have been able to afford one, especially during an already financially strapped time.

The whole issue boils down to greed on both sides of the fence. Hungry and greedy real estate agents and brokers not being 100% truthful to their clients. And the clients knowingly biting off more than they can chew. Better judgment should have been used by both parties as they made these real estate transactions, because now, in the end, everyone loses.

george bush Foreclosures Taking a Hard Look at Both Sides of the Issue

Now to our good friend, Mr. George W. Bush, who as of today signed into law a bill that aims to boost our struggling market and provide a fail-safe Fannie Mae and Freddie Mac, according to CNNmoney.com. The bill is twofold: 1. To offer affordable government-backed mortgages to homeowners at risk of foreclosing on their homes. 2. To bolster Fannie and Freddie with a temporary rescue plan and a new more stringent regulator. Ironically, Bush promised to veto the bill as of last week, but decided to sign at the last minute. He still is opposed to one aspect of the bill though – giving aid to states to buy foreclosed property. Hmmm, go figure.

Posted by Brian Murphy on July 30, 2008 1:05 PM | del.icio.us | Digg

  • Combaticus
    Late to the party as usual, but here's two cents:

    A house is something you live in. "Home" is a concept. I'm tired of hearing all the hand-wringing and sob stories about all these poor people "losing their homes." If they didn't make a down payment, and only paid a few months' worth of the mortgage before it adjusted, then what are they losing? They're only invested *emotionally.*

    I am thankful every day that I didn't buy a house near the peak in 2005. God knows I tried. After all, everyone kept saying prices would never come down and it was the best time to buy and we had to buy now or be priced out forever. And we placed our trust in a real estate agent and signed papers and had no idea what would have happened had this reality come to pass. So I have a little sympathy, but not much. It's your money; it's your responsibility to do your due diligence.

    Unless it's NOT your money, I guess, and then it's up to the taxpayers to bail you out.
  • P
    And, AH, you are dead on with what you said as well. It's not about bigger and badder. it's just about what you have, and managing that, and being a good steward over that.
  • P
    Tom:

    And, I, too, agree with you, in that most people think that people are inherently good. And that's what predators do. They lure you in. They don't seem predatory. That's the tragedy in it all.

    Most people have a dream. what ever that may be. To marry, have a family, have a home, a blockbuster career, or any combination thereof. And, in all of those instances, you can meet a charleton, a gigolo, a boss that's a snake in the grass, and yes, a predatory lender that targets one of your core needs, in Maslow's heirarchy of needs. And that's where the tragedy lies. Everyome wants the same things. However, everyone is now shrewd (I didn't say DUMB) enough to realize that many, many people live and breathe dog eat dog world mentality.

    Thanks for the lively discussion.
  • B
    Brian Murphy sure - You said that "there are quite a few people out there that believe that these individuals in foreclosure should not be saved.” and that "is something that is really scary." So, I took it as that you feel that people that think this way is scary in your mind. I guess I misunderstood? Why is taking this position of not saving people from foreclosure scary? Miscommunication someplace, I look forward to your clarification.
  • I agree with all the comments...be smart, know what you are signing what you are buying. I think people just got wrapped up in what everyone was doing around them...so everyone else was doing it so it must be okay to sign...without reading...without a lawyer. I am one of those people.

    I am educating myself now...reading everything I can just in case something were to happen. A great resource lately was this book called "Defeat Foreclosure" by William Dorich (Real Estate Expert) and Merle Horwitz (Trial Lawyer.) They did a fantastic job explaining foreclosure and all the options out there. (here is the website if anyone is interested http://DefeatForeclosure.org

    Thanks for the post. Interesting comments/discussion.
  • Brian
    Hello to all. Thanks so much for all your comments and your readership. It is very much appreciated. I tried my dandiest to tread on both sides of the fence...I guess B Felt differently - more on that later. I figured this blog would elicit a lot of comments and passionate responses. Part two is on the way my friends. As far as P's point, yes if you have money allotted for a house you should have one allotted for a lawyer to look over the paperwork. I love your point about them being interpreters - so true.

    I was a little confused by your statement B, "so I guess you know where I stand. In all honesty I am closer to siding with Leykis and Beck. My goal in this blog was to remain as neutral as possible and simply be a messenger. Of course I have an opinion, but I leave that up to you all fine people to share. "My way of thinking is scary," hmmm...please clarify B. Again thanks for reading.
  • HB
    Tom,
    Were those mortgage professionals that took out loans they couldn't handle smart..or just greedy? Perhaps looking to flip it because they were sipping some of that same Kool-aid and started believing their own mantra that real estate will always go up.
    B,

    I agree with you wholeheartedly. I don't have any sympathy and will finally look forward to buying a house for my family.
  • B
    Brian Murphy, you said "But here is something that is really scary, there are quite a few people out there that believe that these individuals in foreclosure should not be saved." So, we know where you stand on this issue. I'm on the side of Beck and Leykis and I feel your way of thinking is scary. If there was fraud involved, the buyer can sue the lender/realtor. I need home prices to come down to buy a house for my family. People will loose homes - most of these were irresponsible. They will be mostly replaced by responsible people. What's wrong with that?
  • Tom
    And I apologize for the various misspellings there. :-)
  • Tom
    P,

    Totally agree with you. I think my big problem was that a lot of people believed their mortgage guy when they said, "This is the best thing for you." And why wouldn't they? The brokers had an implied (but not legal) fiduciary responsibility that they cultivated to win the trust of their clients. And I strongly doubt that during they run-up many mortgage professionals suggested someone get a second opinion on their loan.

    In other words, people were told, "I'm the expert, I do this all day every day, and you CAN afford this payment. I've put thousands of people into this same type of loan and you have nothing to worry about." People didn't take out these loans because they just thought it up and did it. It was offered, they were assured, they was accepted.

    The idea that somehow the people who took out these loans were ignorant or financially illiterate may hold some water. However, that simplification overlooks the thousands of very smart people (including many, many mortgage professionals) who also took out the same kind of loans!

    Look at it this way, if the problem were confined to greedy home buyers who wanted to live outside their means, banks wouldn't be writing down BILLIONS in loans. The driving force wasn't people making $50k a year clamoring for $400k homes, the drive came from the investment houses who loosened lending standards in a drive for higher returns.
  • AH
    Part of being a home owner is being smart and responsible. Although I do feel for those who have or will be losing their homes, I can't help but wonder why people are not responsible enough to know "if it sounds to good then maybe it is!" In what world could a person/family with an income $30,000-$50,000/year afford homes upwards of $400,000?? We, as a nation must get over the importance of image and start to learn to live within ours means.
  • P
    Tom: What you say makes sense.

    In a perfect world.

    But frankly speaking, when you have agents working with brokers, working with lenders, working with banks, and the entire vicious cycle that's on the hamster's wheel, who really has your best interest at heart. Everyone in that equation is trying to make money.

    An attorney is trying to make money as well. However, an attorney (just like a doctor, or anyone else with a specialized service (IT, HR, etc), are, at the very least, interpreters. And regardless to whether or not there are honest lenders, when you are dealing with language that you are not accustomed to seeing, you should always know what you are signing on the dotted line for. You just need to know that. And, if you are putting 20 percent down on a house, then you can afford to put 2k down to speak with a real estate attorney who can help you through the process.

    Mind you, I am a very compassionate person and I don't like to see anyone booted out of their homes, by any means. I am just asking some very important questions.

    There is a principle that says "what goes up must come down". This housing market was too good to be true. With all of this subprime mortgages going on, these 'no income required' loans, cause a ripple effect not just in the real estate industry, but touches everything and everyone, hence the current 'recession', if I may.

    I was told during the housing boon that a single woman who makes less than 100k, that the time is NOW, and that I can qualify, and that I need to sacrifice.

    I get that. I get what it means to be 'house poor'. But there is a difference between being house poor, buying all kinds of things with your property, versus being held hostage by your mortgage, not being able to do something as go out to dinner with your family.

    I know I am going all over the place with this, but ultimately, yes, you are correct, we do need more honest mortgage brokers, but then again, there is predators in every profession you come across.

    And that, is my take on things.
  • Tom
    Just want a little clarification here. My understanding of this law is that the government itself is not offering any loans. What they are doing is offering insurance to banks that make these weird 90% current-value loans. So it is still up to the various banks to decide wether or not to allow the refi into the loan that is 90% of the current value, thus taking, in some areas, a 30% hit to their bottom line.

    It all seems complicated enough to where it will take many months to figure it all out, and thus help no one currently in default.

    And P, shouldn't the people generating the loan have been telling people how much they could afford based on their earnings, assests, etc? We don't need more lawyers, when need more honest mortgage brokers.
  • P
    Question for you, Mr. Murphy. If the person is looking to purchase some property, they must have a least a reserve, and, to pay a real estate attorney, say 1 grand to look over your stuff for a few hours. . .

    Wouldn't that be worth the cost of your interest only/adjustable rate/or any combination thereof home?
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