Florida Foreclosures
Florida Foreclosures
It seems like everybody is pointing the finger blaming someone else for the recent explosion of foreclosures seen in the Florida real estate market. The truth of the matter is everybody played a role, and now nobody wants to get caught holding the bag.
Mortgage brokers continuously say that they were only trying to help the buyers at the time of purchase and get them into the buyer’s dream house. Most suggested to take a ridiculous ARM with a teaser rate of 1% or 2%, or a pick a pay option which allows the buyers to choose 1 of 4 different payment options without explaining the consequences. The problem is both of these products are negative amortization loans which means as time goes by the principal balance of the mortgage goes up not down. This makes it almost impossible to build equity in a house.
The banks are crying poverty because of all of the foreclosures and short sales. They’re losing billions of dollars, but don’t feel bad for them either because these are the same institutions that offered these negative amortization products to the public over the past three years. They knew the ramifications of the loans that were being offered and continued using them because at the time they were making a killing on the corporate bottom line.
And then there are the people who purchased these houses when real estate was at its peak. They never questioned anything that the mortgage brokers said and just assumed that it was normal to have to refinance a mortgage after the first year or two. Not only did they refinance and have to pay closing costs all over again, but most of them cashed out and took ungodly amounts of equity out of their house as if it were an ATM. Most of the people spent the money on new cars, boats, personal items or even attempted to start up a business. Now that prices have fallen, nobody seems to have the money that was taken out during the refinance to bring to closing in order to close a transaction. Most people are saying there is no money left.
Everybody involved with these transactions should carry some of the blame. There is no single person or entity that should bear the blunt of it. They were all consenting adults able to make decisions which just happened to turn out bad for everyone.
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