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Anybody out there want to buy a house?
Either a brand spanking new one or a slightly used one?
For many months now, those with eyes to see, and even a vague knowledge of what's going on in the housing and financial industry have been worrying about the huge numbers of houses being sold to consumers with average (read poor) or poor (read very bad) credit and no down payment. This follows the collapse about 3 years ago of the mobile home - land purchase loans to anyone who would slightly fog a mirror held under their nose.
This week sees news articles about the numbers of mortgages in default in various areas of the country. See here and here and here. And see too many other news articles to count on your fingers and toes.
Countrywide mortgage has recently been advertising in my neck of the woods like every thing is so good that they will damn near pay your mortgage for you if you'll just make a call to them
But a good friend of mine who has been in the mortgage industry for 36 years told me 6 months ago that countrywide would accept the application and perhaps even approve it, but would keep asking for more info and new surveys and appraisals even up to the hour before the closing making it impossible to close a loan with them.
What does this mean to you? Damnifiknow. I don't know you or your financial circumstance. But I do know that if you have the cash, you can go to any bank around here, and I suspect in a lot of other areas, and buy a brand new house built by a good builder, in a good subdivision, for less than they loaned the builder. Because they have had to foreclose on him and any number of what used to be good risks and have more houses on their books than the federal regulations permit. I have personally been offered houses for $80,000.00 less than the appraisal of $250,000.00.
If only I had the money or knew some one with the money to invest.
What will be the fall out for any of us. Maybe not much. Maybe you are struggling to make your own mortgage payments. Now might be a good time to see if you can negotiate better terms on your present mortgage.
The housing industry has carried a huge part of the countries economy for a decade now. Big and small industry has moved overseas to where production cost are less.
The good thing is that this has spawned huge numbers of small businesses. The Bad thing is that so many of them are serving the housing and related industry.
Henry Ford priced his cars so that his own workers could afford to buy them. What happens if the consumer doesn't have any money to spend?
Riddle me that, Batman.
We'll study more on this in the coming posts.
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1 comment:
All I know is that I bought a house with a nice hefty down payment and excellent credit, and now because of the foreclosures and the glut when I HAD to sell it because I was transferred I got $30,000 less than what I paid for it. Two and half years ago.
And of course I can't deduct that on my taxes though if I had MADE money then I would have had to pay capital gains.
I hear a lot of talk about relief and help for people too dumb to study up about interest rates and what property tax is. What about the financially responsible homeowners who effectively were hosed by the shifty mortgage company paired with the idiot buyer.
I assure you, as a single person who's last company declared bankrupty so she would lose 16 years of pension, I don't have $30,000 just lying around to toss away.
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