Pinetop White Mountain Blog

Good Afternoon Everyone,

I am sure by now you have heard about the halt to Foreclosures by many of the large Banks due to the discovery of the "foreclosure mills" and the independent companies who were hired by the Banks to push paperwork through the court systems.  The original intent was just to  speed up the process.  Somewhere along the way it got distorted as these types of things often do and the process got sloppy.  There were errors made of that I have no doubt, but when the investigation is finally over, the fact is that those errors will be few when compared to the volume of foreclosures pushed through the "mills".  

Does it bother me?  Of course it does because like you, I am tired of seeing the Big Banks do whatever they want and get away with it.    The process may have been flawed, but they had  every right to do what they were doing.  If someone doesn't make their payments on the property they are going to lose that property to the Bank.  The borrower committed to making the payments in exchange for the Deed when they signed the loan documents at closing.  The Bank gave a loan against the collateral (the property) and if the payments aren't made, they have the right to take the collateral.

Don't get me wrong, I am not on the side of the Banks.  Many lenders made bad loans to people who couldn't afford them.  They put borrowers in terrible products that they didn't understand.  The Banks made a ton of money by initiating these loans and many people have suffered as a consequence.  The key word here is "some" of the loans were bad.  Others were just people who jumped in to more home than they could afford by burying their heads in the sand assuming that everything was going to stay the same.  There were warnings a plenty saying that the high market could not endure and that the economy would not be able to continue to support all those loans.  No one, including the Banks, listened.  We all chose to fly high when times were good and now we are all suffering through the downturn. 

Do I think there will be fallout from this latest crisis?  Probably, but not to the extent that many of us would like.  It is more likely that a few high place officials will lose their jobs.  Some of those who were pushing paperwork through may find themselves in hot water, but the truth is they were only doing what they were told to do.  It will be the little guys who were sitting in their little cubicles pushing paperwork that will suffer the most.  The Big Boys will still be standing because he who controls the money controls the power.  The old "To Big to Fail" adage will still stand and the Big Banks will stand strong after this is all over.  

The only real effect this will have is another slow down in clearing the marketplace of the backlog of foreclosures.  It will only delay the recovery of the Real Estate market.  I wish it were otherwise but the fact is that despite a few slaps on the hand and perhaps being fined for being naughty, I seriously doubt anything will happen to the Big Boys in the Banking Industry.

For what it is worth there is my take on things.  I wish I could give those who are holding on to hope that this may prevent them from losing their properties, but I can't.  The facts are what they are, if you don't make your payments you are going to lose your property, and in the end, the Big Banks will win once again. 

Until next time, keep reading, maybe I will be proven completely wrong.

Sandra Paulow, Associate Broker, GRI, SFR

Your High Country Connection for Real Estate.