If you were to ask me, my response would follow in the words of best selling author, Robert Kiyosaki. Your house is NOT an asset. You see, an asset makes money 24 hours a day, seven days a week. Your home is a liability. Money flows directly from your pay check to pay for the expenses of your home. This depletes your monthly cash flow. This is becoming more evident as the rate at which people are losing their homes hits record breaking levels.
In the days leading up to the major financial meltdown I questioned something that politicians rarely discuss. Days after the terrible tragedy of 9-11, interest rates dropped to an all-time low in order to help prop up the economy. For the first time, people saw what terrorism on American soil did to the financial equity markets. While the stock market crashed, people scattered into new investments, which they felt, had more control over “real estate”. They used the banks’ money to leverage and get higher returns on their investments. People who knew nothing about real estate hopped on the gravy train and started flipping houses. New banking instruments were formed. No one quite understood what the repercussions would be, but, hey, it was free money, so why look a gift horse in the mouth? Not long after, the bubble began to form.
So my question is: Whose fault is it?
Was it the government’s fault for not regulating the mortgage industry? Mortgage brokers were pushing loans like used car salesmen. Clients were manipulated into bad loans with sleazy tactics.
Was it the banks’ fault for allowing it to happen in the first place?
Allan Greenspan? For not regulating the trillion dollar mortgage industry?
Barney Frank? Who misled the public by telling them Fannie Mae and Freddie Mac were adequately capitalized, just weeks before they where taken over by the government?
The Democratic Congress? Which denied the Bush Administration’s three requests to have Fannie Mae and Freddie Mac investigated?
Barack Obama? For not creating enough jobs to support the American dream to keep home ownership alive and well?
Or maybe Wall Street? For creating CDO’S and synthetic CDO’s. They bundled up mortgages and sold them to foreign investors, rating the paper as a triple AAA investment. Wall Street hedged the bet with a product called a Synthetic CDO which bet against high risk mortgages. Sometimes they would sell ten Synthetic CDO’S per risky mortgage!
It is my hope that you are never faced with losing your home. However, if you find yourself in a distressed situation, please know there is help out there. Please see our application page. We can help you, but you must act before the bank acts!
