George Percel

Right on! We have to overcome a predisposed mind set created by national media hype. Many people who are actively looking today tend to overlook the medium- and long-term proposition of real estate. They want to buy as if they were going to flip it tomorrow, to make a quick buck.

The back room and hall-way conversations are finally taking center stage. I am looking forward to more wisdom from the pioneers of the new information age in real estate.

The current mortgage/real estate crisis was created by one thing: GREED! At the turn of the Century, in the wake of the dot com meltdown, when Wall Street was underperforming the idled investors/speculators, I prefer to call them commodity traders, entered the real estate market and decided to buy and sell real estate as they did pork bellies. The financial sector, not to be left out, created a number of “innovative” investment vehicles to churn more money into the real estate market. The perfect storm was created. Builders and developers reacted eagerly to fill the “demand” created by the commodity traders. The resulting “real estate boom” which was the sustaining force of our economy in the early part of this decade created an inconceivable spiral of price increases (can you say inflation), which at some point had to end. Many uninformed consumers, looking to make a quick buck, were duped by the mortgage industry, and unscrupulous real estate agents, into believing that this unusual market condition was the answer to their dreams for wealth. Today, we have the son of S&L in spades. While Congress is trying to find a solution that will save everyone’s bacon, the consumer will be the one who suffers. I have no empathy for the commodity traders. However, I do have great concern for the end users, the folks who purchased a little more than what common sense would dictate, but are able to meet their current obligations. In many cases the loans they bought cannot be refinanced because the value of their property is lower than their debt, and a higher interest rate would put them into jeopardy. These are the people that need to be saved by forcing the lenders to extend the terms of their loans for 5-7 years at the original interest rate. The non-performing loans should be written off by the lenders and the properties auctioned off at the best price someone is willing to pay with the stipulation that the purchaser cannot resell it for at least 5 years. They must occupy it or rent it. The existing oversupply of unsellable properties would be immediately altered. These properties would go a long way towards resolving the affordable housing crisis in most communities. As in medicine, to cure a severe ailment drastic procedures must be considered. The housing market was “infected” and it must now be cured with drastic procedures. We must, once and for all, excise the commodity traders and lenders from the market and allow it to recover and function by its own merit. The unintended consequences of meddling in the real estate market by Government maybe worse than the cure. Government must assume some of the responsibility for being asleep at the wheel while Wall Street had its bash. It is unacceptable that they throw my tax dollars at the problem as the solution. Those who made handsome profits during the hyper activity should accept the yoke now.