Home Loans - Back to Basics

A lot of the national headlines of the mortgage industry can give a person a very empty feeling. With the count of lenders that have closed reaching 115, see http://www.lendersimplode.com/, a majority of the public believes the mortgage industry is on the brink of collaspe. They believe this because they read headlines. Log on to your computer, open your news paper, ask your neighbor, all accounts point to failure in the mortgage market. American Home Mortgage just shut down, 10th largest mortgage company in the country, over 7000 employees with no jobs. There are up to a 114 companies just like AHM. I ask the question as to why? And is this really a problem?

Why are companies closing down?
1. Greed. Most companies leveraged themselves to try and take advantage of the profitable mortgage business, and when the investors said no thanks companies are left holding the bags, out of business.
2. Greed. A number of these companies disregarded the fundamentals of mortgage underwriting and where faced with buying back loans underwritten on their wholesales lending lines of credit.
3. Greed. When you put a customer in a home with no money down, that home is losing value, the customers credit worthiness is in question, it makes for a dangerous combination. This was done time and time again over the last few years. The companies doing these loans, see lenderimplode.com

Is this a real problem?
1. Yes- In the short term, 1-2 years, people will loose the money they had invested in the AHM's, jobs will be lost, peoples will not be able to keep there homes, and others will not qualify under new guidelines for future home purchases.
2. NO - Those new guidelines I just mentioned are actually the guidelines from 5 years ago. The guidelines before too many companies got carried away with GREED.
3. NO - It is back to basics for all of us.

My business partner, Phil Lechter, worked at the Rich Dad company for 7 year before we created Community First Financial. If you know anything about the Rich Dad company and the books they have written you understand what basics are, but let me brief them for you.

What are Basics?
Educate your self about the process of buying real estate.
Build your team of advisor's to help you with the process.
Identify the correct properties at the correct prices
Have yourself ready to buy- financially, emotionally, and physically.
Continue your education of real estate

Best of luck in your real estate adventures.

Troy Schuricht
http://www.communityfirstfinancial.com/