No Housing Bottom in Sight with Short Sales on the Rise

        Short sales are on the rise? (Gee, you think?). This isn’t news. Anyone not living under a rock knows this. And this will only continue until we are able to stop the layoffs and cutting of employees hours. But this great nation that we live in is more focused on spreading the wealth than they are with helping businesses expand or simply keep their doors open. Two things that would greatly put the odds in their favor are tax cuts and the loosening of credit. The only thing that will help us get out of this recession is the Entrepreneur. These are the people that see an opportunity in any market. They don’t listen to the masses and run for cover. They know that when the market is down that is the time to act because that is when the most millionaires are made.

         The real estate investor is one such entrepreneur that can help turn this country around, but the credit tightening has all but choked them out. Not to say that every person that goes to look for funds should be able to get a loan, but if you are an experienced investor with a proven track record than why wouldn’t a lender want to lend to that person. The lender will make money on a performing loan and real estate has always been a safe investment if you do the due diligence before you pull the trigger. “If” is the key word in that sentence because that is one of the biggest reasons that we are in this situation. Everyone was so greedy that they didn’t really look into the deals that they were buying, or lending on, for that matter. There was so much speculation out there and everyone just assumed that the prices would only continue to rise. Not to mention all of the mortgage fraud that was going on. This is the part, in my opinion, that did the most damage because it has caused lenders to be gun shy which has led to an almost standstill of lending.

         You may wonder how a lender was able to lend $300,000 on a $250,000 house. Well, in the heyday of the housing bubble almost every appraisal came in at the exact amount that was needed. How miraculous! And those weren’t even the ones that were committing all out fraud. Those who caused so much mayhem were the trio of criminals; the investor, the lender and the appraiser. (That sounds like the opening of a bad joke.) The investor would buy a property in bad shape, do shoddy repairs and sell it to an unsuspecting buyer. The lender and appraiser would make sure that the house appraised for the amount that was necessary and if the buyer needed a little “help” to qualify for the loan then the lender would work his magic. The trio would get fat and happy and the buyer would soon find that their brand new home is a money pit and falling apart around them. There are many people sitting in jail right now because of this very scenario. The problem is that they aren’t the only ones paying for this scheme. Every investor and home buyer has been affected. The lenders are now so cautious to not be a victim again they have stopped what could be the lifeblood that can bring this economy back to life.