Housing bill bail out - some aspects you may not know, be part of the solution

Follow the link to read more about some interesting aspects of this bail out for Fannie Mae and Freddie Mac. This article is by Gail Russell Chaddock and she addresses sub prime loans, minorities and block grants that will be included in the bail out.

I have been reading all I can find on this topic, this situation is the result of a partial ethics problem with Buyers and Realtors, and a total ethics problem with financial institutions, in a word GREED. For several years I have been telling everyone in this area including bankers, buyers, sellers, Realtors etc. that most sub prime loans are not a good thing. Several years ago I had another Realtor get disgusted and tell me that helping buyers who couldn't qualify for a regular mortgage get a sub prime was a good thing! This Realtor's point was that at least they were going to have some equity in their property - HUH??? How??? Zero down, Seller paying closing costs, ARM, interest only loan, in debt up to their elbows, shaky inclome and still spending - where's the equity?

Fortunately, in the area I practice we didn't see a huge number of sub prime mortgages. We are seeing an increase in foreclosures and you can almost bet when you read the papers they will not be listing a local lending institution, they will have some out of state weird financial company you have never heard of. Personally, if one of my buyers can't qualify for a conventional mortgage I advise them to wait until they improve their credit, pay down their bills and save at least some money for a down payment - say 3%. This advice is not usually taken well but it will save them thousands, potentially tens of thousands of dollars.

That advice didn't help my business but it did help me sleep at night. I take the responsibility to my clients very seriously, I assist them in getting the best mortgage available for their specific circumstances. Sometimes, that means their good faith estimate is faxed to a number of other lending institutions, remember financial institutions do not have to give the best terms available on a loan.

I believe a buyer should negotiate their mortgage terms at least as hard as they negotiated their purchase price.

This is a challenge to all Realtors out there, If you don't already help Buyers with their mortgages start. You deal with mortgage terms everyday, your Buyers deal with mortgages what, every 4-7 years?

http://www.csmonitor.com/2008/0722/p01s04-uspo.html