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Foreclosure Lessons Learned April 18, 2008

Posted by shaferfinancial in Uncategorized.
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There seems to be a forgotten point in all the stuff written about foreclosures and sub-prime loans.  Sub-prime loans were never meant to be the last loan folks got. They were designed to be a bridge loan, bridging the time it took to get your credit scores up to a point where you could qualify for a better loan.  That is why so many folks went the variable rate route.  Now, I am on record saying that a variable rate for folks with a poor credit history was not prudent, but if did give folks a modicum of time to save some money and get credit issues taken care of.  The fact is thousands of folks continued their behavior and did not take care of their credit, which locked them out of changing their loan to better rates.  And of course this added downward pressure on real estate values, further eroding their ability to refinance into a better loan.

We could of probably avoided a whole lot of teeth knashing and victimization if things were done right at the highest level and these people with poor credit history and no savings were never allowed to buy homes.  There would have been less upward pressure on home values 2002-2005 and then less downward pressure 2006-2008, therefore a more even market climb.  But just like the stock market 1999-2001 where people were paying exorbitant amounts for stocks with no or little earnings we need to be taught a lesson every now and then.  Here it is.  When it comes to stocks earnings do matter and when it comes to loans past behavior of borrowers matters.  Pretty simple when you put it like that!  

Here in Florida last months forecosure rate dropped significantly.  This might indicate that the worst is over for us.  The economy has a way of working itself through issues.  Hopefully, this is what is happening now! 

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Comments»

1. barbara - May 26, 2008

Foreclosure is something that can happen to anybody in any financial income bracket, it is embarrassing and it does not discriminate. Foreclosure is not something that you should hide from in hopes that it will go away, it won’t. I was able to prevent foreclosure by contacting mortgagebuyerbasics.com Getting started was easy and private. They were helpful in answering any and I questions that I had about foreclosure and the options I had to prevent it. All consultations are free and there is no pressure.


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