Clean Up the Mess First…Then Figure Out What to Do Next!

mom sneaker carton

*Caption Reads: ” Willy is that your sneaker in the living room?”

When you consider the fact that a scant 18 ~ 24 months ago, many real estate agents in Grand Rapids, Michigan had never heard the term “Short Sale,” it is remarkable that a Search of Listings Currently Active on the Grand Rapids Association of Realtor Multiple Listing Service has 1,217 homes categorized in this way.

Almost 40% of Last Quarters Sales Volume(2006) was Short Sale or Foreclosure related. With just over 10,000 Listings, that equates to 1 in 10 Current Listings being a Distress Sale.

While, the number of homes in Foreclosure and Short Sale are higher on the East side of Michigan, Western Michigan has certainly not escaped the harsh brunt of the downward economic spiral. 

Today, as unemployment figures rose to 5% nationwide, President Bush acknowledged that more will need to be done to prevent a larger crisis. In a recent interview aboard Air Force One, Ed Gillespie, counselor to Bush outlined with broad strokes some items under consideration by the administration such as FHA Reform and allowing Fannie Mae and Freddie Mac to purchase jumbo loans.

I find these proposals a little disconcerting.  Fannie Mae and Freddie Mac have hardly been harbingers of good cheer over the past year as mismanagement at both corporations created serious losses.  I’m perplexed by the reasoning which would allow these struggling institutions to access higher loan amounts which are already riskier than the more standard conforming notes.

As the government continues to insist that it will NOT bail out those who made risky investments, I look at the these incongruities and wonder…Have we Really Run Out of Options…Or Are We Simply Loosing Our Grasp on Reality?

This got me to wondering, what solutions would be provided if the government handled it’s financial dealings the way regular folks have to.  How might a plan to Solve the Crisis play out differently IF the rules Moms use every day, all across America to keep “Law & Order” were applied to the current crisis.  Here are a couple dictums that Mothers everywhere will recognize.

When You’ve Made A Mess…Clean It UP & Then Figure out What NOT to Do.

Every mother knows that kids will make  mess. Most of the time, it’s fairly easy to rectify.  Sometimes, they make a big mistake…commonly called a “doozie” which requires more extensive reconstruction or restitution.  Irregardless, No Sane Mom continues to give Johnie MORE STUFF to Mess up before he cleans up the mess he’s already made.  Johnie Deals with his Mess and THEN we talk about what to do…or rather what HE’LL be doing or NOT doing Next.

Supervision is not a Good Idea…It’s the ONLY Way to Prevent Catastrophes!

Ah…every Mother would wish that for One Day, Just One Day when Everything would take care of itself.  Junior would pick up his clothes without being reminded, the dishes would be placed in the dishwasher rather than clogging up the sink, toys would miraculously return to their assigned spaces…and a celestial choir would serenade us to sleep.  The Celestial Choir is just about as unlikely as any of the other options happening without some subtle and not so subtle reminders in most homes. 

I fail to see how the on-going crisis in the real estate and lending industry is much different. The proverbial cat has been away and the mice have had a heyday.  A recent Associated Press article reported that 7 States have now adopted standards which will govern and regulate the activities of mortgage brokers.  The effort is expected to be expanded by Democrats in Congress with an additional 42 States pledging to join the effort by 2009.

While the effort is being applauded by Congress, a gaping hole remains in the reform efforts.  The newly revised standards and regulations will ONLY apply to mortgage brokers and loan officers at state-regulated banks, but not employees at nationally supervised banks.  Does it make sense that Bank Loan Officers who also make the some of the same types of Loans which created this mess should not be supervised?  Why should they be granted a blank slate without recourse for past activities?

Are we Serious? It seems to me, that we’re still far too content to play with this mess…not fix it. If we fail to do what is truly necessary to Clean Up the Mess, it will be impossible to accurately determine a structure for a lasting solution. While, tough medicine may not be politically expedient, it’s the only way the patient, in this case an ailing economy, has any hope of being cured of a dreadfully serious predicament.

Copyright 2008 Audu Real Estate All Rights Reserved

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