Continuing from last post on Double Dipping Home prices – Who is to blame? – I , we will see the rest of the participants who also bare the blame on the current housing disaster.

Financial Institutions:
Banks and lending insitutions are the 2nd in line to be blamed for this big mess in the real estate industry.

1. Wacky Foreclosure Process – Foreclosure is a long and tough for the home owner and as well the lender. Last year there was compliant about lenders taking advantage of the homeowners and foreclosing homes which are not eligible because of the mishandling of foreclosure process. It is caused because there was no oversight from government. After the complaint, government has to call to hold the foreclosure process and start another investigation and couldn’t find any big mishaps. But holding the foreclosure process created a snowball effect. Many banks stopped their foreclosure and tried to be more careful and started processing them with caution. This slowed the foreclosure properties coming to market and it will take a year for all the disstressed properties to clear which will haunt the housing market as per Realty Trac.

2. Tight Credit – As per Fed, QE2(Qualitative Easing 2) which just about to end in few weeks really puts lot of money in the market. Bank should take advantage and try to lend them out. Also low interest rates still a good things for banks to borrow and lend money. But many banks are still wary of the economy condition and not willing to open up their doors to lend out Business loans and mortgages even to the reasonably qualified borrowers which takes us to the next point.

3. Low Mortgage Approval rating – Many agents complain about deals falling through because buyers are failing to get their mortgage approved even though they are prequalified. As per a report, Mortgage approval rating fell in recent months because of banks trying to approve mortgage loans even to much qualified borrower for some unknown reasons.

4. HAMP Failure – Two weeks ago, Government stopped issuing incentive payments to 3 major banks Chase, Wells Fargo & Bank of America and ask them to boost their HAMP program participation and do more to avoid foreclosures. It is little late but never late than ever. They are just trying to tighten the belts of the bank which will help but it should have done long time ago.

Agents
Agents play an important role in every home transaction. With lots of foreclosures and Short sales, they are happy to list them but they are bogged down by the paper work needed and efficiency goes down. Unless its a HUD auction, most of FNME, Fraddie Mac, REO properties has to follow the normal sale offer process which is lot of transaction and calls to handle and they are bombarded with calls from investors. Many foreclosure listings are awarded to big brokers in big cities, who call their own shots and make their rules on how to submit offers to sellers and sometimes really rude/harsh on handling their fellow buyers agents. This really turns down many agents who really wants to recommend foreclosure properties for owner occupants but hey are staying away from it.

It is all investors who clogs the market now and they are not ready pay or even so less than listing price. Seller agent is forced to consider it since there are too many investor with similar offer price and not enough owner occupants. As per the last report from NAR, 2011 first quarter pre-owned sales are mainly by investors and out of which 30% of them are cash buyers. It is not encouraging because real estate industry needs first time buyers and owner occupants to really get it going which is going to take time.

Buyers
Everyone knows its buyers market as per current real estate condition goes. With that in mind, many prospective first time buyers are really looking for damn good bargain. They want .50 cent for a dollar whether they are buying foreclosed home or resell property depending on the location. Investor buyers compete for foreclosed properties more than ever and putting it on rent which is not good for many neighborhoods. It creates unstable community and destroys the reputation of the area and eventually brings the prices down.

Sellers
Sellers are the victims of this whole ordeal. They are stuck in their home even if they want to get out real bad for some personal reasons. It is bad sellers market but some sellers don’t want think that way. They want what they want and don’t want to understand the current market situation. It will work out to their favor if the location and market condition in their area but thats only very less percentage compared to other areas which are seeing lot of foreclosures sales. These disstressed properties are bringing down the property value and if the seller has to get out and no other choice, he/she is forced to take the hit which worsen the situation more. They are unintentionaly taking part in this home slump by reducing the prices to just get out of their homes.

All the above players play important role whether the market goes up or down. They cannot just wash their hands if the market goes south when they want to be the first one to claim victory if it goes north. They have to take responsibility and try to help to get this real estate market revived. Stopping more foreclosures and trying to get rid of current foreclosure inventories will give way to new home sales which will eventually stablize the housing prices, more than anything else, would make it easier for private lending to return. This will inturn start the employment growth. It’s all connected as economist say and something has to be done at some point to stop the down trend and start the up trend.

Let’s do what we do the best and try to help many Americans realize their American Dreams!!

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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