The Reluctant Real Estate Agent - Separating Real Estate Facts, Fictions and Myths

Occupy Our Homes Movement

I was listening to radio interviews with some of the “occupy our homes” movement players. We all know foreclosures are an emotive subject and we’ve heard of the bank horror stories that, despite their best PR efforts to say otherwise, have a failed mortgage refinancing program. This is a subject within itself made even more complicated as most banks no longer own their original customer mortgages. We the public own much of this worthless debt via our pension plans and mutual funds.

No one considers that had the property market remained steady, it still would have imploded because the millions of mortgagors at the end of the their three and five year ARMs, would not be in a financial position to make their new monthly capital plus interest mortgage payments. While the arguments of fairness rage on, out of all the endless debates and foreclosure arguments, I’ve yet to hear one person actually say: “You know what? It’s really my fault that I’m being foreclosed on. My greatly exaggerated stated income allowed me to buy the home of my dreams at a monthly payment that I knew was not sustainable for the next 30 years”

When a business files for bankruptcy, the bank appoints a receiver and whatever physical assets the business had, these will be sold for cents on the dollar at auction. Mortgagors are millions of small business owners who did not make a 15 or 30 year financial plan and as a result, their home buying business has failed. Therefore the predictable outcome is their foreclosure and bankruptcy with the bank being the home auctioneer.

When millions signed their mortgage contracts it’s expected they will abide by its terms and conditions. If you miss 3 months on your car payments you know its going to be repossessed. Just because home owning events have not turned out favourably, why should millions of homeowners who have missed months of mortgage payments and are now facing foreclosure, be granted any special payment mortgage exemptions or debt forgiveness?

Millions of home owners who did not get on the “liar loan” band wagon, are in neighborhoods saturated with new short-term home owner residents. So should these millions of homeowners who have played by the rules and are still sucking up the pain of making mortgages payments on their devalued homes, because after 16 years they are too far invested to get out of it, also be given the opportunity to refinance or have mortgage debt forgiveness? After all it’s not these remaining millions of home owners fault their home values were decimated by the millions of financially irresponsible new home owners, who have either walked away or been evicted and left these once thriving neighborhoods covered in debt pollution.

As a real estate agent I often deal with upside down home owners, some live in a $400k home on a $40k income and others purchased 4 condos on $30k income….was this ever financially realistic? Of course not which is why these home owners are being evicted. At the height of the market I was approved for an $800k loan on a $120k of stated income that included $50k of expenses, but I did not rush out and buy 6 condos.

Before the supporters of the “I’m sorry because I knowingly signed my mortgage application based on my highly exaggerated stated income” occupy-our-homes cause get back up on their socialist soap boxes, let’s remember those neighbors, who purchased homes before the bubble and got slammed by a category 5 liar loan mortgage hurricane called FORECLOSURE. They are now left unaided picking up the pieces of their devalued home values and 401k plans that are now saturated with trillions of dollars of worthless bundled mortgage bonds. Recovery of both these investments for millions of people that it is going to be too long and too late. Especially for many of the 10,000 baby boomers retiring each day for the next 19 years.

I am tired of the self-inflicted woe-is-me mortgage debt victim attitude and seeing people live in their homes not pay their mortgage for 1 to 2 years, who just wait to be evicted. Yet the family across the street stays quiet, diligently abiding to the terms and conditions of its mortgage.

Whatever next for the lets occupy something movement? Well if they really want to support a worthwhile cause full of social injustices, whose outcomes are often deadly and financially impact more people than those in foreclosure, here is an idea: – Occupy hospital beds because in America today one family goes bankrupt every 90 seconds due to medical costs it can’t afford to pay!

No matter what the arguments and emotions are on what the banks should not have done, those who regulate them knowingly allowed the system to hyper inflate the housing market which replaced the Dot.com bubble investment insanity. Greed and power litter the corporate world and financial markets and someone else, normally the tax payer has to pick up their rubbish. Meanwhile the only homeowner legal fact that remains is: “Did you make your mortgage payment this month?” And we all know the answer to that question.

Bottom line on the foreclosure debacle is this: – “Did you make your payments on time and have you been a good mortgagor? If you haven’t made your payments, then you’re in default. As no one forced you take on the loan then you must face the consequences of your actions”

Category: Buyers
  • Ross Johnson says:

    I agree with all that you say, you are the first person to say it how it really is. My neighbor has been in their home for the past 18 months proudly tells everyone he has not made a mortgage payment. The banks gave money to the likes of my neighbor, who never had the ability meet the full terms of their mortgage. My neighborhood was one a thriving community. Now my home is back to the values I paid for it 15 years ago and the neighborhood is a ghost town. I try not to be angry but I’m stuck paying on my home and the guy across the street is laughing all the way to the bank and not paying his mortgage. Great article…well done. Ross

    January 31, 2012 at 4:39 pm
    • Reluctant says:

      Thanks Ross, not that’s its any constellation but I see this outcome everyday. I’m sure there are some genuine cases of hardship but as I said those that are complaining about are responsible to meet their mortgage payment terms and conditions. Now thousands are not paying, living rent free and two years of mortgage payments saved. When they do get evicted many of the don’t bother to go after any assets. All the institutions want to do is sweep it all under the carpet and move on. TRR

      January 31, 2012 at 4:48 pm
  • Paul Jordan says:

    This article completely ignores the fact that the banks are equally to blame in this tragedy. In the main, borrowers were making good faith efforts to be a part of a historic run in housing prices. The banks knew what was going on and they accepted the appraisals and made the loans. The banks were at just as anxious (and as it turns out reckless) to make money on their part of the process, but one would imagine, with much better insight into the big picture than the borrower.

    The banks now want to put the entire responsibility of the bad loan on the borrower, and this article seems to enforce that conclusion. Yet it is clear that expecting the borrower to bear the full responsibility for the bad loan process is bad for everyone. The foreclosure process takes time, drains resources, diminishes neighboring home values and is a drag on the entire economy. Combine this with legal confusion about who actually holds the mortgage, robo-signing and other self-inflicted banking problems which further complicate a resolution. A negotiated solution which could include principle reduction and refinancing at historic lows, could go a long way to recovering the housing market and the broader economy.

    Even though I don’t have a mortgage, I’ve been stung by the home market collapse as we all have. The root of this and the larger economic problem can be traced back to Clinton’s repeal of Glass-Stegall, as well as the lack of regulation and enforcement of regulations. So, ultimately the solution is political. Will we elect a new president and representatives that choose to ignore recent events and continue to champion the free market as defined by Ayn Rand and now denounced by Alan Greenspan, or will we choose people who recognize that the American system of individual capitalism is one that is balanced by the interests of the public good, which requires reasonable regulation?

    February 7, 2012 at 12:26 pm
    • Reluctant says:

      Paul.

      There are many blame pieces of this jig-saw. One piece that has never been mentioned is the real estate industry. Who despite being the business did not once question the sanity of home prices going up by 20 percent each year. It’s also amazing that the Attorney Generals, who could stop the robo signings, did not see the problems of the robo signing of mortgages. In effect the housing bubble simply replaced the insanity of the dot.com bubble.

      Who is to blame the drug supplier or the drug addict? We educate our kids to “just say no” but as adults we do the very opposite. When an individual becomes a consumer addict they drive the supply and demand for the product of their choice. Like all addicts they need a supplier and in real estate the banks became the new drug lord. They willingly supplied easy loan money to their new credit addicts. This in turn helped serve the needs of the millions of people whose addiction was their superficial materialistic lifestyle, based on loans they could never afford. Was it ever realistic for an individual on a $45k annual income to sign up for a $400k mortgage and then for good measure purchase 4 condos in Orlando based on a flip investment strategy? When was it ever considered normal for the average working person to be allowed to make these major investment purchases as if they were nothing more than a two for one grocery item?

      The banks now own millions of homes which are not on the market. There is no plan in place on how they intend to release these homes and when how will they price them? If they drop them all on the market at once, it will produce another real estate tsunami. Additionally banks in high foreclosure areas continue to under appraise on current listed home values and they are being very restrictive on lending. As a consequence people are not listing their homes and potential home buyers are being forced to rent. This has driven the rents costs up by 20 to 30 percent in areas that have thousands of empty bank owned homes. So now we have replaced mortgage debt with rental debt and paying 40 percent of your pay check on rent is not good news if you are trying to save up 25 percent for a mortgage down payment.

      Like you I would like to see a political solution but I have zero faith in any politician and let’s be honest I don’t recall anyone of them shouting out to put the brakes on the runaway mortgage train. Both the Clinton and Bush administrations were major contributors to this crisis. We are not out of the woods yet and when you factor in the sleeping economic giants of the price of a gallon of gas and the continuing unabated escalating health care insurance costs, which now covers less and less. Then even if the nation goes with your latter suggestion on the next election, if these giants wake up before the housing crises is resolved, the outcome could be beyond the reach of any new administrations direct influence.

      The topic is so vast and I greatly respect your views. I agree with much of your feedback and I hope that you will continue to make informed contributions to further posts. Thank you, TRR

      February 7, 2012 at 3:58 pm

Your email address will not be published. Required fields are marked *

*