Banks Need To Keep Their Eye on the Ball: Helping Qualified Buyers Buy

ome say that the latest decision of major banks to halt foreclosures temporarily is not all bad. Yes, homeowners facing foreclosure may have just received a reprieve, and the temporary delay in sending these homes to the market could allow for some price stabilization, and that could help sellers who act quickly.

But realistically, doesn’t this just give buyers one more reason to sit on the sidelines in what is already a troubled housing environment? Doesn’t it create fertile ground for lawsuits that won’t benefit anyone except attorneys? And doesn’t it just delay the inevitable and prolong the foreclosure overhang problem?

Banks seem to be “dumbing down” the whole process to help the lowest common denominator – and cover themselves to the max – rather that doing everything possible to help buyers with resources buy homes. If there are truly situations in which a homeowner’s rights were compromised in the foreclosure process, then of course that should be addressed, but if banks are doing this because of minor technicalities, they are once again worrying about those who defaulted, creating a ripple effect of plummeting price comparables, homeowners who will stop making payments because they can, and escalating finger-pointing spawning litigation…instead of focusing on facilitating the home-buying process for qualified buyers.

I just heard about a buyer with a 40% down payment trying to buy a home. The mortgage was declined because other homeowners in the subdivision were behind on assessments. Other banks are saying “no” to qualified buyers because the ratio of renters to owners is too high.

And in some cases, the brokerages being used by asset managers to market foreclosure properties are out of the area or otherwise poorly qualified, making the process difficult if not painful for the buyer and his or her agent.

It’s understood that liberal lending practices are what got us into this mess, but the other extreme is not the answer. The foreclosure problem is a sad one affecting lives, and no one likes to see that – but it is what it is and the sooner we move beyond it the better. What is needed is leadership with thoughtful, practical solutions to problems we haven’t seen before caused by the preponderance of distressed properties. Without such attention, buyer confidence will continue to erode. The data tells us there are many individuals who are sitting on cash and want to buy. We need to do all we can to remove the barriers.

Source: http://networkedblogs.com/94Gtc