I recently was watching a show concerning real estate foreclosure. Lawyers were advising people of all their options in order to prevent the bank from foreclosing on their house. It seems there are government programs available to allow one to alter their home loans and even lower their interest rate. Some even allow the mortgagee to re-finance a lesser balance because their home has “lost value.” Please notice I put lost value in quotation marks. As I go further into this matter that will become clearer.
way of identification, I have in my working life been a real estate
lender as well as a real estate appraiser. I also had to collect back
the money I loaned. In some cases I had to foreclose on real estate in
order to collect.
I listened to the lawyers explaining how to prevent foreclosure, I
never once heard the phrase, “Just make your house payment and make it
on time as you agreed to in the contract you signed.” I assure you if
you make your payment, the lender has absolutely no desire to kick you
out of your house. The last thing a banker wants or needs is a bunch of
empty houses in his inventory.
have heard the complaint that real estate has lost value and many who
owe money on their houses are “under water.” What do you suppose happens
when you finance a car for, let’s say, seven years. You don’t seriously
think a car is going to increase in value, do you? Usually before you
make your first payment, your car is worth far less than you paid for
it. It is not the bank’s fault or responsibility to insure the value of
your home grows or even remains the same. These things happen.
am convinced our current real estate problem is the fault of the US
Congress and Freddie Mac and Fanny Mae. They required lenders to finance
homes for unqualified borrowers and to loan more than the appraised
value. Real estate appraisers also are to blame for their phony
we have now is not the end of the world. We have a temporary glitch and
we will look back on this and wonder why we didn’t buy up all the cheap
houses that were available. We still have 330 million people who must
have a place to live and that number is growing every day. They are not
going to live in tents or caves. They are going to be in the market for
homes for many years to come. In other words, this too shall pass.
years ago I met a man in Seattle. I sold him a very expensive car and
he paid cash for it. As I got to know him I learned he lived through the
big downturn in Seattle when so many people were leaving there was even
a sign heading out of town that said, “Will the last person leaving
please turn out the lights.” He told me that he started buying up empty
houses for a song. In just a very short time, the whole situation turned
around and he began selling those homes. When I met him, he was a very
wealthy man. That same situation is happening now. If I was a much
younger man, I would buy as many houses as I could.
the rule. If you don’t want to have your home foreclosed on, pay your
payment. If you don’t want your car repossessed, pay your car payment.
And finally, if you want to get very rich, start buying all the empty
houses you can afford and get ready for the turn around. It will happen.
Ron Scarbro October 13, 2011
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