Should Lending Practices Be Changed?
Money really does make the world go round.
Everyone knows that and it's money that drives the real estate market.
The money that's bought in (i.
e.
loaned by lenders to potential home owners) and the money that is made through the sale of houses and the speculation of property investors.
Without lending institutions which also have growth targets to meet it is entirely possible that the housing market will come to an end.
No new houses bought, hardly any houses sold, people moving in only when they inherited.
In terms of real estate this is total meltdown, real estate Armageddon.
Yet, here comes the bad news: A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period in the State of California, up 34.
5 percent from 53,943 during the previous quarter, and up 166.
6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla.
It seems we have a problem.
Make no mistake and the problem is too much of a good thing, too much lending under inappropriate conditions.
The charge that's being levied against some of our nation's money institutions is far from unfounded.
It does appear, upon close examination, that in the heady rush to meet growth targets many of these institutions failed to follow their own self-imposed rules regulating when and how they loaned money.
The result was an uncontrolled, almost, spate of growth in lending which made the real estate market overheat and has now precipitated the current credit crunch.
Should we stop lending altogether? That is a patently unreasonable suggestion and to actually legislate and try to federally enforce lending practices across each State may be akin to using a sledgehammer to crack a nut, though the nut in question, in this particular case, is pretty large.
Lenders are hurting under the current run of mortgage payment defaults and the number of foreclosures they are being forced to serve so this may be lesson enough.
Money institutions may be a little greedy at times but they are also very responsive to market conditions and truly capable of adapting.
Left to their own devices with a little help from local legislature they are perfectly able of self-correcting their lending practices and curbing their targets so that they lend in a more responsible, realistic manner.
To the question of whether lending practices should be changed the answer has to be almost certainly.
It is happening right now and it is happening faster than we think.
This does not mean that the government should interfere and spend thousands or even millions of the taxpayers' money enforcing what in the end is being applied voluntarily for very good reasons.
Everyone knows that and it's money that drives the real estate market.
The money that's bought in (i.
e.
loaned by lenders to potential home owners) and the money that is made through the sale of houses and the speculation of property investors.
Without lending institutions which also have growth targets to meet it is entirely possible that the housing market will come to an end.
No new houses bought, hardly any houses sold, people moving in only when they inherited.
In terms of real estate this is total meltdown, real estate Armageddon.
Yet, here comes the bad news: A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period in the State of California, up 34.
5 percent from 53,943 during the previous quarter, and up 166.
6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla.
It seems we have a problem.
Make no mistake and the problem is too much of a good thing, too much lending under inappropriate conditions.
The charge that's being levied against some of our nation's money institutions is far from unfounded.
It does appear, upon close examination, that in the heady rush to meet growth targets many of these institutions failed to follow their own self-imposed rules regulating when and how they loaned money.
The result was an uncontrolled, almost, spate of growth in lending which made the real estate market overheat and has now precipitated the current credit crunch.
Should we stop lending altogether? That is a patently unreasonable suggestion and to actually legislate and try to federally enforce lending practices across each State may be akin to using a sledgehammer to crack a nut, though the nut in question, in this particular case, is pretty large.
Lenders are hurting under the current run of mortgage payment defaults and the number of foreclosures they are being forced to serve so this may be lesson enough.
Money institutions may be a little greedy at times but they are also very responsive to market conditions and truly capable of adapting.
Left to their own devices with a little help from local legislature they are perfectly able of self-correcting their lending practices and curbing their targets so that they lend in a more responsible, realistic manner.
To the question of whether lending practices should be changed the answer has to be almost certainly.
It is happening right now and it is happening faster than we think.
This does not mean that the government should interfere and spend thousands or even millions of the taxpayers' money enforcing what in the end is being applied voluntarily for very good reasons.
Source...