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| | The Mortgage Explosion Network is not currently active and cannot accept new posts | | Navigating Through The National Mortgage Crisis | Views: 250 | | Mar 04, 2008 11:27 pm | | Navigating Through The National Mortgage Crisis | # | 
J Angelo Rodriguez | | Navigating Through The National Mortgage Crisis: Part 1
by J. Angelo Rodriguez
There isn't a day that goes by that consumers aren't reminded about
the ongoing mortgage crisis that has negatively impacted millions of
homeowners. According to the national news media, what was once
thought to be nothing more than minor market adjustments, has now
spiralled into one of the biggest financial dilemmas in U.S. history.
The mortgage crisis has crippled the housing markets, leaving
homeowners desperately searching for new ways to replace both
traditional and non-traditional lending options no longer available.
The ramifications are even more dramatic, as hundreds of mortgage
companies have been forced to close their doors, resulting in the loss
of ten of thousands of jobs.
One of the biggest misconceptions about the mortgage crisis is that it
is only impacting consumers who have had a history of negative credit.
Nothing could be further from the truth because even credit-worthy
homeowners, who have never been late on their mortgage payments, are
finding it difficult to either refinance or access the equity in their
homes due to the tightening of lending guidelines. In short, while the
mortgage crisis may have originated in the sub-prime industry, it is
no longer confined to creditors who had had a poor payment history.
Now more than ever, a solution is needed to assist homeowners in
overcoming the financial burdens that have been created by an industry
precariously on the verge of implosion.
Especially challenging is the luxury home market, where consumers
acquired non-conforming loans based on geographic locations in which
the housing prices were higher than the national average. Due to the
tightening of credit standards, many lenders who specialized in
offering financing on these type of properties have either
discontinued their programs or made significant underwriting changes
that have dramatically limited their ability to again offer this type
of financing. Some of these changes include the elimination of stated
income loans, which were used by tens of thousands of consumers to
purchase their homes initially, but can no longer qualify under todays
stricter guidelines.
For consumers who originally purchased their homes using non-
traditional financing, such as sub-prime or alt-a financing, the
situation is even more daunting because these type of loan programs
are no longer available. Thus, if a consumer did not remedy the credit
issues that existed when they acquired their home initially, they are
in for a rude awakening. Many of these loans have begun to recast at a
significantly higher interest rate, leaving consumers stuck with a
higher monthly payment, and without the ability to refinance to a
lower interest loan because of their inability to qualify for new
financing. Many financial experts have used their business forums to
chastize both lenders and consumers for making and accepting these
alternative financing options, but the reality is that for the vast
majority of consumers the programs worked, and it allowed families and
individuals purchase their homes at a time when traditional lenders
turned them down.
Statistically, the overwhelming majority of the consumers who accepted
the financing terms from non-conforming lenders are current on their
mortgage payments, which is a fact that is not being discussed by the
news media. It is the small minority, not the majority of consumers
who are having challenges. While it's true that the number of
foreclosures and consumers who are currently in default on their
mortgage payments is reaching all time highs, the actual percentage of
homeowners who are continuing to meet the terms of their mortgage
obligation is still well above 90% of all homeowners. This simply
means that for decades, most mortgage companies have operated on very
tight margins, and the small increase in foreclosures have pushed
several of these entities to bankruptcy. However, to their credit,
these margins at one time were sufficient for them to remain
profitable, at least until the mortgage crisis reared it 's ugly head
and changed the rules forever!
Many consumers have asked me why it seems that lenders are unwilling
to assist homeowners who are facing difficulty, and isn't there a way
for them to obtain relief from the rgovernment or consumer-advocacy
groups. The short answer is that most lenders will work with consumers
short-term, but long-term is another matter! Plus, when you factor in
the fact that lenders are having severe financial difficulty due to
the ongoing crisis, it's become more and more difficult for them not
to enforce their rights of foreclosure in order to remedy the default
by the homeowner. The lender has a legal right to protect their
investment, and their investment is the property in which the mortgage
has been secured by, i.e. the home that you are probably living in.
These rights are generally enforceable, regardless of the intervention
of government bureaucrats, etc. So if you believe that the government
can assist you overcoming financial hardship, this is not the case.
While the government can provide short-term assistance, they cannot
provide consumers with a long-term solution.
In Part 2 of this article, I'll discuss more about how consumers can
follow simple, best practices that will assist them in navigating
through the national mortgage crisis. I'll also talk about how
homeowners can discover different ways to increase their monthly
cashflow to assist them in improving their overall financial
situation. In closing, the mortgage crisis is real, it cannot be
ignored, and consumers need to make certain they remain proactive and
aware of how to steer clear of the most common mistakes made that
homeowners make when navigating through the mortgage crisis.
J. Angelo Rodriguez
Founder and President
Life's Elite LLC
http://www.lifeselite.com
Private Reply to J Angelo Rodriguez | | Mar 18, 2008 4:12 pm | | re: Navigating Through The National Mortgage Crisis | # | 
Jenny Fardello | | Good post. I have a non conforming and mine is up to date. i wish that the media would unleash the facts~ Private Reply to Jenny Fardello | | Mar 19, 2008 3:25 pm | | re: Navigating Through The National Mortgage Crisis | # | 
Shannon Panaro | | This is great information, please post more! Private Reply to Shannon Panaro | | Mar 27, 2008 7:08 pm | | re: Navigating Through The National Mortgage Crisis | # | 
Sandy Morris | | You know I was in the mortgage business for over 15 years and my husband has another 15 years on top of that. It is amazing to me the inaccurate information that is being put out by the media about the "subprime mess". Alot is being blamed on the mortgage company or originator. And I think this is unjust.
You are correct that it is not just subprime it is in all parts of the mortgage world. One of the biggest problems I see is the continuing decrease in home values. Our housing needs to be stablized and stablized soon.
The time for our government saving big banks should stop...after all think about this a minute...who actually made the loan programs available? Wasn't it the big banks?
A mortgage company or originator only offered the programs that the big banks made available.
We need to help the housing economy which in turn helps a larger section of our country such as home improvement centers down to the little painting contractor.
Thanks for letting this old girl vent a little....don't always believe media reports.Private Reply to Sandy Morris | | Jun 17, 2008 6:38 pm | | re: Navigating Through The National Mortgage Crisis | # | 
Todd Jennings | | Angelo- Great article, I really enjoyed reading it and look forward to part 2.
Do you think when you applied for a mortgage, the bank agreed that they would lend you the funds for your new house but you had to abide by there terms? Say the bank had a program that was going to show you how to repay them in 8 to 12 years without altering your lifestyle and you would own your house free and clear. Doesn't it make sense? The bank get's there money back so that they can loan it out to other's, you own your home free and clear. What would you do without a mortgage payment? Probably buy an investment property correct, and another and another.
Hypothetical situation:
Jack and Jane by a house, bank loans them 200k at 6% on there terms stating that Jack and Jane will have there mortgage paid off in 9 years using the banks program. 5 years go by and Jack and Jane owe 95k on there house. Then a huge housing crunch comes, there home depreciates to 150k, with a traditional mortgage they would still owe 186k. What would be there options? They could wait it out till the home starts to appreciate again. Take 36k and pay there mortgage down. They can't sell it. But they don't have to worry about a thing because they have 55k in equity still and there home will be paid off in 4 years. They are way ahead of the game.
This is a great system that banks should of started many years ago, because with a system like this I do believe that we would not be in this housing crunch that we are in today.
Todd Jennings
soc5548@aol.com
623-521-5907
Send a free "Thank you" greeting card www.sendoutcards.com/5548Private Reply to Todd Jennings |  | |
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