Were stuck in a quagmire again...
Sounds like the opening of a country tune. But it is much more serious than that. I am talking about the economy. And to micro target just a bit, I am directly focusing on the real estate environment as we speak. I believe that sharp declines in property values led the United States into this economic crisis and before any recovery begins, before we even see the bottom, real estate is going to have to carry us on its back out of this mess.
But things are looking up ---
Yep - some reports come out every now and then with positive news. Some months the rate of unemployment is down. The stock market is breathing again. Existing and new home sales every few months show a spike. The American consumer is clinging to every bit of hype the government and media throw at us. ...And buying into it hook, line and sinker most the time. So what if statistics show we are losing jobs at a slower rate every now and then, but we are still losing huge amounts of jobs monthly. And that doesn't take into account previously high earning professionals who have settled for 50% plus drops in their income just to survive. An you hear reports from top dog REALTORS® and lending institutions that are dominating market share. Now is the time for the cream of the crop to dominate as clutter has left the marketplace. But there are strong signs that clearly show the economy is staring at a double dip. And this dip may not be so pretty.
Elizabeth Warren was on CNBC recntly discussing housing and lending. She is one of my favorites and when she is being interviewed she commands my attention. Her finger is on the pulse and she is not afraid or swayed by anyone/group to tell it like it is... Check her out below: click on her picture to watch the video ---
Now let's take a look at housing and lending -
Randy Croszner, former Fed Governor, has said "it is easier to get a mortgage now than it was before"...
HUH? Man, if only.... if only more consumers qualified for mortgages now than before. But the truth is, it is harder to get a loan today than it was two months ago. And that is a pattern that has been trending downward. If you agree that the real estate market must carry us out of this economic funk and loans are harder to qualify .... ohhh by the way, US Home-Buying Applications Sink to 13-Year Low .
How can American consumers not be buying houses when values are so depressed and interest rates are at all time lows? Think about that one....
So here is the Quagmire: How can we increase lending that will in turn stimulate borrowing which will lead to increased new and existing home sales that will allow the real estate market to find the bottom which will in turn stimulate the economy and lead us out of this mess?
Don't shoot the messenger but to increase lending to start the process we are going to have to loosen up credit guidelines in order to qualify more consumers for loans. The eligible borrower pool has got to be increased and given the fact that Credit Reports Sink to New Lows I see no other way than to forgive past credit and underwrite loans based on current ability to pay.
Controversial thoughts? No doubt... got any better ideas?
MORTGAGE ADVICE - PROBLEM SOLVER
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