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Douglas Trudeau , Assoc. Broker
Prudential Foothills Real Estate
64 N. Harrison Road, Suite 160
Tucson , AZ 85748
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$700 Billion To Bail Out The Greedy

One word summarizes our current economic situation “Greed!”

President Bush proposed a $700 billion bail out. A blank check without guarantees for homeowners and room for more greed by the executives that could have prevented this problem in the first place. I’m all for helping responsible homeowners who got caught up in this mess. For those who took out a loan and never made a payment on their mortgage, what can I say. Arizona ended up as one of the top states during the frenzy. Needless to say, Arizona is one of the top 3 states needing bail out.

Everybody is pointing fingers at who caused this mess. None are looking at the fact for every finger pointed out, there are 3 pointing back. Our government deregulated constraints on financial institutions. Only to create a greedy environment. Presidential advisers failed us, our senate failed us, and our house of representatives failed us. Its an accumulation of politicians whom we elected failed us. Some are saying that they warned about the current status. How do they expect a whisper to be heard in a roar of partisan disagreement in a do nothing senate and house?

Executives and their analysts changed the rules for leveraging funds to get more and more money. The safeguards that had been established were discarded like a the morning newspaper. These supposed financial wizards sat back fattening their pockets while they drove their companies into the ground. They got ruthlessly greedy.

Loan officers wrote up loans for questionable buyers based on the loosened rules set by lenders. They got caught up in that game to sell, sell, sell. More and more buyers stepped into the picture, increasing revenue and creating some monsters who went beyond bending the rules in the name of greed. Loan officers deal with the day to day, pay check to pay check, needs like most wage and commission workers. They relied on lending institutions to know what they were doing. Sure there were some crooks here, but, they were not the majority.

The media jumped on the band wagon and promoted the frenzy by reporting on the market. Creating a false sense of security for average Americans wanting to live the American dream. Nobody sounded the alarm with their supposed financial experts to predict where the market could be heading. Nobody took an investigative approach to report what was happening between the lines. The media reported what people wanted to hear.

Home buyers took risks they wouldn’t have been allowed to take if safeguards had been kept in place. More and more watched the news, read newspapers and heard on the radio how home prices were reaching unattainable levels. Panic set in for many who thought the American dream was going to pass them by. They took chances in hopes that the future would get better and they could afford their dream in a few years by buying it today. Some got out and out greedy. Some just got caught up in the frenzy. Some bought with no intention of paying the mortgage. Some got greedy.

Home sellers saw an opportunity to make lots of money. Greedy sellers raised the asking price for their home knowing there was some buyer somewhere who would pay their price. Homes that sold for $218,000 one month sold for $247,000 the next month. Home values were artificially inflated by demand. Greed overwhelmed many sellers.

Builders bought up land and built homes at phenomenal rates. Increasing prices as demand increased all in the sake of greed. Housing quality suffered. Many of those homes built in 2004 through 2006 have more problems than homes built prior to 2004. New home builders came and went with the tide.

Home Appraisers were caught in the trap as well. Many having to justify inflated prices. The last safeguard for managing the frenzy was placed on the shoulders of thousands of appraisers unprepared to bear the burden. Money created greed, and some gave in to take advantage. A few were unscrupulous. Most got caught in the title wave that swept the nation.

Realtors starting coming out of the woodwork. If you didn’t do what buyers or seller demanded, another Realtor would. Some Realtors cautioned their clients about interest only and adjustable loans. Some buyers listened, some didn’t. It was their decision, not the Realtor. There were some Realtors who pushed buyers to buy more than they could afford to rake in commissions in the sake of greed. Many of the greedy are not Realtors today.

Greed swept our financial institutions and our nation. Some people made a little money, a few made a lot of money. Others couldn’t afford to get caught up in the frenzy. Now we are faced with a serious problem. Will there be abuse? With $700 billion on the line someone somewhere is going to find a way to greedily get a chunk of the pie. Will those who really need help be overlooked? You know there will be. This needs to be a well thought out plan to minimize abuse, and minimize overlooking the needy. FDR managed to pull it off after the Great Depression. We are relying on a do nothing Congress to exceed the success of FDR. In any case, something needs to be done for an extremely complicated and extremely controversial resolution. Without which, we are destined for a financial collapse that could be greater than the Great Depression.

Greed is the evil here. This is a bail out for a greedy financial institution, greedy loan officers, greedy appraisers, greedy builders, greedy realtors, greedy sellers, greedy buyers, and some innocent little people who got caught up along the way. Our government needs to make sure that greedy financial institutions and their leaders are not rewarded for incompetence.

This entry was posted on Tuesday, September 23rd, 2008 at 9:15 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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