The New Architects and the Re-Construction of the Real Estate Market
by Hassan NicholásAt this moment, as you are reading, another headline signaling the collapse of the US real estate market is going to press. And so goes our desensitization to the current reality. In this day and age where mortgage delinquencies, subprime lending, and housing inventory are at historical highs it can be easy to have a casual attitude about our real estate market. Perhaps we have been so inundated with "doom and gloom" headlines that we have found acceptance in our fate and have resigned to the fact that if we're going to ride this wave, we got to get our feet wet.
In many ways this crisis will change the way people think about real estate in general. The so-called "American Dream" as picturesque as it sounds, has been nothing short of a nightmare for many homeowners...and even potential home buyers. Now that the "lions" and "vultures" have feasted all that we have is a shell of that "dream". When we decide collectively that we want to rebuild these abandoned neighborhoods, revive the market, and open up feasible opportunities who will be part of the re-construction?
Nonprofit Organizations
If there is a lesson to be learned it is that the home buyer must do their due diligence and not walk blindly into one of the biggest purchases they will ever make in their lifetime. Housing agencies and community development organizations target these individuals in hopes that through proper preparedness and education one can avoid making costly, emotionally devastating, sometimes unmanageable decisions.
Imagine how many families would have been saved if uneducated borrowers were fully explained adjustable-rate mortgages? Or even the correlation between their FICO score and their interest rate? Yes, some of the foreclosures are tied to the reckless spending of greedy "investors", first-timers trying to get rich off of real estate, and speculation. However, within that cloud we also find families who were simply victims; targeted by shady real estate professionals. To purchase requires a significant amount of money and likewise the buyer should invest a significant amount of time learning as much as they can about their purchase. First-time home buyer workshops offered through the aforementioned groups illustrate the home buying process to the would-be buyer as well as provides resources that can otherwise be difficult to access.
However, a homeownership education workshop is not a panacea for the inevitable. Even those who were well-informed purposely chose to dive head first into something they knew they couldn't afford - allowing greed to blind them. It is not the speculators that need education, rather the person seeking the "American Dream" - they are ones that need to be enlightened. Another group that would benefit, are of course, the current homeowners who risk foreclosure.
Policy Makers
To curb foreclosures from metastasizing any further Congress has been scrambling to put together new legislation that would alleviate the financial squeeze for distressed homeowners. A bill approved by the Senate in April of this year would give tax breaks to owners of foreclosed homes - a measure that would make the prices of "starter homes" (those that a first-time home buyer would typically start out with) artificially high - benefiting only the banks that own the foreclosed property.
Additional pressure has fallen on the weight of some of the very agents that helped perpetuate the trend of reckless lending, the big banks. Lenders such as Countrywide and GMAC have had to beef up their foreclosure prevention efforts and extend more opportunities for existing borrowers facing foreclosure. The government sponsored HOPE NOW initiative attempts to identify at risk homeowners for loan modification and restructuring, but the success that this program will achieve is yet to be seen. A California state plan called for a similar approach - but one that was limited only to borrowers who were current on their payments. It is the "limited spread" of assistance that concerns many real estate professionals and homeowners. FreedomWorks, a grassroots organization that promotes individual liberty held an educational event in March of this year for policymakers - outlining inequities found in the government's 'bail out' approach. There has been other vocal attempts coming from the real estate field to suggest a different approach for helping distressed borrowers, but until any major movements are made, options for borrowers will remain the same.
Much of the success of these programs is dependent on the leg work of the assigned nonprofit housing agencies to identify and serve eligible households. Counselors from these agencies are trained and certified to represent the borrower in all activities and correspondence with the lender and/or mortgage servicer. With their help, a borrower may be exposed to loan modification, forbearance, or any other workout plan. Other proposals have been aimed at re-working how down payment assistance programs work for first-time home buyers.
Affordable Housing Advocates
Advocacy groups supporting affordable housing initiatives can be instrumental in connecting public concerns (nonprofit organizations) with private and government backing. ACORN (Association of Community Organization for Reform Now) is one of the most vocal groups - taking their 'Stop Foreclosures' campaign nationwide. NeighborWorks, "a national network of more than 230 community-based organizations in 50 states" launched 1 888-995-HOPE, a government supported foreclosure prevention to address the needs of the many struggling homeowners.
However, a homeownership education workshop is not a panacea for the inevitable. Even those who were well-informed purposely chose to dive head first into something they knew they couldn't afford - allowing greed to blind them. It is not the speculators that need education, rather the person seeking the "American Dream" - they are ones that need to be enlightened. Another group that would benefit, are of course, the current homeowners who risk foreclosure.
Policy Makers
To curb foreclosures from metastasizing any further Congress has been scrambling to put together new legislation that would alleviate the financial squeeze for distressed homeowners. A bill approved by the Senate in April of this year would give tax breaks to owners of foreclosed homes - a measure that would make the prices of "starter homes" (those that a first-time home buyer would typically start out with) artificially high - benefiting only the banks that own the foreclosed property.
Additional pressure has fallen on the weight of some of the very agents that helped perpetuate the trend of reckless lending, the big banks. Lenders such as Countrywide and GMAC have had to beef up their foreclosure prevention efforts and extend more opportunities for existing borrowers facing foreclosure. The government sponsored HOPE NOW initiative attempts to identify at risk homeowners for loan modification and restructuring, but the success that this program will achieve is yet to be seen. A California state plan called for a similar approach - but one that was limited only to borrowers who were current on their payments. It is the "limited spread" of assistance that concerns many real estate professionals and homeowners. FreedomWorks, a grassroots organization that promotes individual liberty held an educational event in March of this year for policymakers - outlining inequities found in the government's 'bail out' approach. There has been other vocal attempts coming from the real estate field to suggest a different approach for helping distressed borrowers, but until any major movements are made, options for borrowers will remain the same.
Much of the success of these programs is dependent on the leg work of the assigned nonprofit housing agencies to identify and serve eligible households. Counselors from these agencies are trained and certified to represent the borrower in all activities and correspondence with the lender and/or mortgage servicer. With their help, a borrower may be exposed to loan modification, forbearance, or any other workout plan. Other proposals have been aimed at re-working how down payment assistance programs work for first-time home buyers.
Affordable Housing Advocates
Advocacy groups supporting affordable housing initiatives can be instrumental in connecting public concerns (nonprofit organizations) with private and government backing. ACORN (Association of Community Organization for Reform Now) is one of the most vocal groups - taking their 'Stop Foreclosures' campaign nationwide. NeighborWorks, "a national network of more than 230 community-based organizations in 50 states" launched 1 888-995-HOPE, a government supported foreclosure prevention to address the needs of the many struggling homeowners.
As the US real estate crisis drags along one can imagine that years from now, when we have fully recovered, will we have learned our lesson? Most certainly most people, owner or renter, has become enlightened by this experience. Adjustable Rate Mortgage, 80/20, and short sale have entered our everyday vernacular. The real estate agent and mortgage lender professions have had their image tarnished. Consumers are more weary, lenders are more strict, and counselors are overwhelmed.
I can say that this whole debacle has certainly changed the way I view real estate and undoubtedly affected my approach to teaching homeownership to first-time home buyers. However, even amongst the "doom and gloom" there is light at the end of this tunnel.
I can say that this whole debacle has certainly changed the way I view real estate and undoubtedly affected my approach to teaching homeownership to first-time home buyers. However, even amongst the "doom and gloom" there is light at the end of this tunnel.
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