Fannie Mae Changes
I’ve recently been pontificating on the effects that the current real estate market will have in the future. I feel at times, that we’re so wrapped in survival mode, that we haven’t taken the time to see what may happen in the future. To that end, I was trying to look at the effects of Fannie Mae’s recent change (May 31, 2008) to provide underwriting guidelines for applicants who have past foreclosures and shortsales on their credit reports. According to the new guidelines, people who have suffered a foreclosure will be ineligible for a loan, for a period of five years and those who have sold as a Short Sale will be denied for a period of one year.
Left with Questions
I certainly feel that the time frames for loan denial are reasonable. However, I’ve heard many arguments that a significant cause of the current housing crisis is the fact that many people who shouldn’t have had loans, received them anyway. I’ve heard a few agents say that people who have had foreclosures, or even went through a short sale, shouldn’t be given any mortgages at all. I’m surprised at this mentality from practitioners. I know that many of us have sat with desperate clients who have done everything possible and just couldn’t sell today, at yesterday’s prices. I know that I have talked to many agents who feel helpless while meeting with clients who have been hit with really hard economic times, medical issues or other devastation.
Play it Out
Let’s say that we add the people before this market who have had foreclosures to those 30 percent or so that are going through it now. Now, let’s say that we follow the mentality of some practitioners in this regards. We’ve now started to alienate a large number of potential buyers, who may be able to overcome their immediate life issues and find themselves in a better position six years down the line. Many of these folks will also be turned down as renters if they have foreclosures on their credit histories. So, where exactly are they and their families suppose to live?
Watch What You Say
For those who are vocal on blogs and other searchable medians, what does this say to their current clients who may be struggling? I suppose some level of benevolence would be expected from a profession that is suppose to act as if they were walking in their client’s shoes. Understanding of the unfortunate position of some people is a necessary aspect of working with clients.
If those in this industry can’t find compassion and a heart for the consumer, than who can?
