YOU WILL PROBABLY NOT LIKE WHAT YOU ARE ABOUT TO READ - PERFECT! NOW READ ON!
Back in 2002 we started telling you that appraisals were worthless, simply an entire industry without value. Lenders told appraisers what they wanted to see on an appraisal, if the appraisers didn't give the lenders what they wanted, the lenders simply found another appraiser. The borrowers paid several hundred dollars for this worthless service. This week the government, through Fannie Mae and Freddie Mac have begun to do loans without appraisals. Yeah, yeah it's not all loans and all situations . . . yet. Bottom line is the appraisals were supposed to help make certain lenders weren't lending more for a property than the property was worth. How did that work out? So, what is property worth you ask? Great question!
Anything is worth exactly as much as two parties, the buyer and the seller, agree it's worth. If I am willing to sell you $20 bills for $25 and you are willing to pay $25, they are worth $25.
Want to correct the housing market problems quickly? Go through the pain and get to a bottom where the pain can begin to heal. Very simple. Immediately stop insuring all mortgages (another worthless industry that sucked tons of money out of deals and now we are starting to see was nothing but a waste,) require ALL borrowers to make down payments of 20-30% the cost of the property that they and the seller agree to. Be certain that the money is truly coming from the borrower and charge 4% interest rates fixed for 30 years.
Defaults on these new loans would drop to less than 1%. Demand for properties would obviously shrink to such a point that only the most aggressive sellers would sell. These sales prices would drop to a point where people could truly invest for real cash on cash investment return purposes thereby allowing people to receive safe, secure, real 8-10%+ returns on their invested dollars (looks pretty good compared to what your wall street money has been doing huh?) Once the prices drop, we will see the balance of the upcoming tidal wave of foreclosures occur. By the way, this number is 3-5x as large as is currently being reported. The pain will be endured so that the healing can begin as true investors looking to earn reasonable rates of return using 3-4 times leverage, will create the market to absorb the supply and within just a few years we will have the strongest, most stable real estate market the world has ever seen.
OR we can continue to look to the government to make things better (LOL) by trying to plug the dike and pissing away trilions of dollars (more) in taxpayer money for the privilege of allowing us to hurt for far more years than is truly necessary. I don't know about you, but I would rather rip the bandaid off, endure the pain and start healing than have it torn off one painstaking hair at a time over the next decade or more, during which time more hairs grow back and the bandaid will have to pull those out as well.
Just a few more things to think about . . .
specifically who receives your mortgage payment?
have they contributed to making this situaiton better or was it people/companies like them that were a major cause behind this mess?
so you should really try and help them out now huh?
what if you and milions of others simply said enough, you stopped paying and forced a scenario like that outlined above?
would this be at all like a revolution?
do things change during revolutions?
are you happy with where things are now?
would change be better?
hmmm if only we knew how to create change . . .
