Mortgage Finance Blog

Consumer Education, Preventing Real Estate Declines in the Future

December 9th, 2010 4:19 PM by Diego Quintero

“More credit counseling could have prevented some of the worst banking practices that helped spur the recession,” says Mike Newbold. Mike is a regional president for Ohio-based Huntington National Bank. I know that the majority of professionals view our marketplace as a place where we need to close our current transactions and simply get paid. But the truth of the matter, is that we need to ensure that we grow with our current client base, they are our lifeblood through the most difficult marketplace, so we need to take care of them.

What about this scenario? Agents discuss a brief synopsis of the real estate process with their clients. Shortly thereafter,  agents should call their trusted mortgage brokers to ensure that they can afford to buy, but also so that the consumer knows the implications of taking on such a responsibility. A two-hour seminar can consist of loan qualifying and the latest banking laws that are in force. This would be appropriate for first time home buyers because the lending landscape has changed quite a bit. However,  I would venture to guess that even veteran homeowners will benefit from this kind of program.

I can appreciate the fact that most lenders simply do a quick review of paperwork, then slam the paperwork through as quickly as possible.  After all, that’s what all real estate agents need them to do. But according to the study
, it may behoove borrowers to take some time at the beginning of a transaction to become educated about the process. It will improve our rates of foreclosure in the future and allow the loans to perform instead of default. Additionally, I think that the new homeowner’s would appreciate the extra knowledge.

I am not naïve to think that the foreclosure would not have been an issue, eventually. No one was standing at the banks stating that the bubble would burst.  However, an educational approach would have made the buyers pause and take note of the conditions. Most educational classes could have included  the latest market trends in real estate & finance. Perhaps, the consumers would have been placed in a position to make a decision on their own. Understanding the incredible rise in home values, perhaps the typical buyer would have decided to wait.

Maybe the challenge of setting up a country-wide real estate purchasing class, requiring certification, then being granted the loan status report, would be a good move for the future of our industry. I would not imagine that there are many people who want this downward spiral to rear its head again. Although, there are a few people out there taking great advantage of the good deals!
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Posted by Diego Quintero on December 9th, 2010 4:19 PM

Keep the politicians out of the real estate market. When politicians place a need to have home ownership for all became a reality the results created the latest and largeest real estate bubble in history. The old fashion rules of verified funds, verified income, use of company approved licensed appraisers and audit of every 10th file by management worked for years. Education is wonderful, but government intervention is not the answer.
Posted by apfjpl on December 16th, 2010 5:13 AM

Thank you for the comment! It unfortunate that the politicians directed their aggression to the small to mid-sized brokers. Penalizing them, requiring certifications, etc. The big boys got bailed out and we get to pay more fees to stay in the game. Regardless, we are playing by new rules. I enjoy teaching, so I am hopeful that my educational presentations will enlighten future home buyers. Thanks again!
Posted by Diego L. Quintero on December 16th, 2010 7:51 AM


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