Thursday, March 29, 2012

Underwater in the Desert

Underwater in the Desert. 

There are so many people in the Las Vegas that have the same problem.  A larger portion of homeowners have a mortgage or two, or three that are worth far more than the value of their home.  It has been a disaster for the economy and for employment and it is has many people in the city and the housing market will not recover until there is some kind of reset of the market.  The problem is that we have known this for several years but the banks, for a number of reasons, some being justified and some being completely bogus have been unwilling to follow through on their promises to the American people and to the government.  This is true even though they were saved from insolvency by the Tarp bailout funds. 

The entire scam that was Tarp cost billions of dollars and saved the bankers from meltdown. The ironic thing is that they never did a thing to help the market.  They refused to aggressively write down mortgages which would have slowed the chain reaction of foreclosures.   This would have saved cities like Las Vegas from the horrendous drop in real estate values that has now gone all the way down to pre 1997 levels. 

The result has been tragic for many people.  No one in their right mind will continue paying on property that has dropped over 60% in value recently while their mortgage is worth nearly twice the amount of their home.  Morality is no longer an issue. You have to question a person’s intelligence and sense of duty if they keep paying on an albatross that will ruin their family’s future.  Anyone who would call a person a deadbeat for deciding to walk away from an absurdly underwater home is a pompous ass and should have their head examined.  The shaming that the media and the arrogant bankers tried to lay on the public was just a smoke screen to try and cover up the reality that it was years of criminal behavior in the banking and lending industry that led to the housing meltdown.

This crisis was not created by homeowners.  Trying to blame them is like trying to blame earthquake victims for an earthquake.  The issue now is that the market is at a point that will never be corrected in years unless the banks start to write down mortgages to current values and aggressively agree to accept short sales at market value regardless of the underlying mortgage amount. 

It is ridiculous how much money the government has thrown at the banks to fix these problems.  There has been virtually nothing done to this point except to save the banks and to save the bankers from any liability.  The billions of dollars that have been given to banks went to pay back Tarp in most cases.

The banks did a PR stunt saying they paid back the Tarp funds with profits.  In the majority of cases the banks paid back Tarp funds with other government program monies that were supposed to go to homeowners for mortgage write downs and loan modifications. 

The result has been that properties values in Las Vegas have continued to fall and are still falling.  Another result is that there is a shortage of inventory and that most people who have a mortgage won’t even try to sell because they are just as happy to walk away.

Why?  Partly because of their lack of faith in the modification program and lack of faith that banks will actually do the right thing.  Many people could have been helped by the banks and in turn it this would have helped the housing stock from getting beaten down to unparalleled levels. 

Anyone who wants to short sell and wants to get on with their financial life without having to go through a foreclosure should be seriously looking into a short sale.  It is the best option for most people and it is the only option to ever get a fresh start with out completely wiping out your credit.  The short sale is a bit easier to recovery from than a foreclosure and by the time you can buy again after a short sale there will likely still be great values in Las Vegas. 

The right thing to do might just be the thing that was unheard in the United States prior to this recession.   It may be time to see your home as an investment and treat it like you would treat a business.  You need to make a business decision about your future and do just as the banks would do or the billionaires like Donald Trump and or the former CEO of Blockbuster would do. 

They would get out as fast as they could and as painlessly as they could if they had underwater investments. Your home is now an underwater investment that may never ever recover.  It is time to cut your losses. The easiest, least harmful way is to opt for a short sale.  It really may be the only option in some cases and it is the least harmful to your credit.  It is a shame to have to consider such options but the world has changed drastically the past 5 years and Las Vegas has been hit the worst.  Your future lies in the balance and it is time to start treating your home as your investment.  If it has gone sour then you need to get out as fast as possible with the least damage.  There is no shame in doing what is best for you and your family.  The banks have been paid ten fold by the government and will be fine.  Look into a short sale and get back on tract for a bright future. 

1 comment:

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