Have you noticed how the mainstream media loves to hype any doom and gloom story that might result in the crash of the real estate market? Chicken Little has found employment in the newsrooms of America. Last year we were bombarded with articles and analysis of the impending real estate bubble burst. So-called experts were predicting that the super heated home market would not only slow down but would collapse, taking the rest of the U.S. economy down with it. As usual, experts were surprised.
This year it’s the sub-prime mortgage scare. Sub-prime mortgages are loans made to borrowers with whose credit scores are lower than lenders want for their prime rates and terms. The ability of the borrower to document their income along with the property type may also be a factor. The so-called crisis now is that some of these sub-prime mortgages are in default. The fear is that these defaults will have a significant impact on the rest of the real estate lending market and even the U.S. economy. The sky is falling again and taking down your real estate with it. Not!
A few weeks back, I participated in a teleconference call with Dr. Edward Lazear, chairman of the President’s Council of Economic Advisors and he was asked about the sub-prime mortgage situation. “The White House is not concerned” was his response. He went on to say that the sub-prime market represents only 8 percent of the entire mortgage market nationwide and that only 8 percent of the sub-prime mortgages are in trouble. The sub-prime market is simply too small to have any significant impact on other sectors of the economy. Perhaps the sky isn’t falling after all.
If you have a sub-prime mortgage and you’re in trouble, contact your lender as soon as possible. They have solutions and will work with you. You need to get past the loan servicing department and speak with the work-out department. The last thing they want is to foreclose.
Walt Harvey (R), ABR, CIPS, CRB, CRS, GRI, SRES, e-PRO, QSC, RSPS, TRC. Walt & Arla Harvey are real estate brokers with East Oahu Realty. They specialize in residential, commercial and investment real estate and can be reached on their Web site: http://www.coastalhawaii.com Have a real estate question? Email them at mailto:walt@coastalhawaii.com or call 375-8959.
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