Only Four Days Left in 2007…It Could Not Come Any Faster…
There are not many in the real estate or mortgage sector that would say 2007 was a good year…or even an average year. Many, myself included, could not see this year end any sooner. 2007 brought a complete collapse of the mortgage industry with over 200 major lenders nationwide “tapping out” for good. Guidelines have reverted back to the early 1990 levels and 100% financing is almost a fading memory even with full documentation. 2007 was a culmination of an industry, the mortgage market, that simply lost all rationality and is now paying the price for their mistakes. The thoughts that real estate prices would continue to rise for eternity was simply ignorant and irresponsible. Providing mortgages to borrowers with marginal to simply bad credit with no money down and no verification of income or assets was again…irresponsible. Then you add on that you provide these loans to marginal or bad credit borrowers with no verification of income or assets and no money down on instruments that were simply “smoke and mirrors”. Sure they can make a payment at 1.9%…but making a payment at 7% just a little more than 2 years from when they got it….that is a different story. Throw in that their mortgage balance has risen over those 24+ months and their property value has declined during the same period of time and you now have the perfect storm we are meandering through today.
This “storm” will continue through at least Q1 of 2008 and most likely will continue for the most of 2008 as more and more homes are dumped on the market due to increasing foreclosures creating the perfect buying opportunity for buyers. When the turnaround is going to happen is anyone’s guess at this time but it will come…it always does. The silver lining to this storm is that interest rates should decline in 2008 and prices will also fall setting us up for a perfect buyers market…it could not happen soon enough.
Maybe the mortgage industry will learn from 2007 and will not repeat the same mistakes which have gotten us to this point. Home ownership is a privilege…not a “right”…the mortgage industry has seemed to have forgotten this over the past several years…Placing borrowers in homes they cannot afford serves no one any good…2007 is an example of this…
Here is to a GREAT, WONDERFUL and SAFE 2008…Happy New Year!!!
Have a great day!!!
DC AIKEN, VP
Economic releases stated in this report do not necessarily depict all economic releases for the week. Market Watch is for informational purposes and its accuracy is not warranted. The opinions expressed in Market Watch are not necessarily those of Countrywide Home Loans.
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