It has been five years since the housing market was sucked into a seemingly ever expanding black hole. We have seen the effects at the micro level; families left homeless and destitute. Neighborhoods filled with for sale signs. Abandoned homes ransacked for the metals within, yards overgrown and unkempt.
At the macro level cities, states and even whole countries are reeling from loss tax revenues. In turn, they reduce government spending. Government and corporate layoffs incur and workers are unable to buy goods, pay for services or pay their taxes. And the cycle continues.
But did it have to be like this?
Stop the blame- Let’s accept the fact that we are in this debacle together. It is time to stop blaming the bankers for selling us overpriced houses. It is time the bankers and governments stop blaming us, the consumer, for buying homes that were wonderful, in respectable neighborhoods and well-thought-of investments. We all made an agreement and we all concluded that each other was making a sound venture that would pay dividends many years later.
A house of cards– Of course, sometimes things do not go as planned. In this case, someone, somewhere, decided home prices were too high. The banks stopped lending to buyers. Homeowners could not sell our houses, and we began to default. It was a collective series of defaults that slowly accumulated into an avalanche. And, we now see the end result of this avalanche in our global economy as thirty trillion dollars in mortgages are at risk according to Economicsenarios.com.
No one wants to default- I have applied for loan modifications in 2009, 2010, 2011. Each time my bank found some reason to deny me a modification. My home is “underwater.” I do not make enough money (laid off, pay reduced, furloughs). My credit is no longer high enough. And the banks are right. Things have changed. And they have changed for the families and homeowners of over four millions homes that have now been foreclosed on according to the Financial Crises Inquiry Commission. But no one wants to lose their biggest investment. So, I have filed for my 2012 loan modification.
Homeowners struggle- Wendy, a single mother, had her pay reduced by her employer during a work restructuring. She could no longer afford her monthly payments on her home and she fell behind. She filed 14 separate home loan modifications before she received any help. Like me, she kept being told no. But Wendy continued to persevere when foreclosure and forceful eviction were a daily threat. It was the 15th loan modification attempt before she received any help.
Loan modifications are good– Why do the banks make loan modifications so hard? What is wrong in modifying a mortgage to today’s low interest rates? Business school basics dictate keeping your existing clients happy. It is much cheaper to retain a client than to get another. A happy client comes back over and over. The banks could be making fees off of the refinancing of our homes. Then they could have followed up with fees on checking accounts, personal savings accounts, investment accounts and our credit cards. They could be awash with fees. Instead, people are cancelling credit cards, not spending and hoarding gold and silver.
Billions and billions wasted- Sadly, the bankers, the politicians and the pundits have lost sight of the big picture. Or, maybe, this is all a game to them in which they win and we lose. Consider the $153 billion that we, the tax payers, loaned Freddie Mac and Fannie Mae. How has that helped you, the homeowner? The Federal Reserve is now spending billions each month buying up mortgages from the banks driving down interest rates in what is known as QE3. The Federal Reserve wants things to change, but have you been able to take advantage of this opportunity or has your bank told you “sorry we can’t help you?”
Dennis Cuevas, Project Director and Chief Counsel, Consumer Protection and Telemarketing Fraud states “The mortgage foreclosure crisis is a complex issue that “mushroomed” into a problem, seemingly all at once.”
No, it did not. Just let us, the homeowners, refinance and keep our beautiful homes and we will solve the problem ourselves.