by Therese Daniels

Created on: May 14, 2008

The sky is falling and dooms day is near according to the news media. What has fallen are American home prices, the value of the dollar and the rest of you know what rolled down hill with the declining real estate market. With all the news media is reporting about a soon upon us recession, a yo yo stock market, and the millions of unsold homes in the nation, it creates nothing but public panic and hysteria. It reminds me of the old song, "Where have all the flowers gone?" This one should go "where has all the money gone?" Or should we sing "where have all the qualified buyers gone?" What has increased are foreclosures, builder inventory, and resale houses.

The only dooms day that hit the planet was the crashing of the sub prime market which was inevitable. Now the public is blaming the lenders for the great big economic pit we are in. When I say we, it includes the whole planet. (When America gets into trouble, so does the rest of the world.) Now the lenders are striking back with stricter parameters for buyers to qualify for home loans. This reduces the number of potential buyers while the housing inventory on the market continues to increase. Lenders are eating lots of unwanted vacant standing inventory and collecting no revenue. That puts them in the real estate business. No, No! No!

Is it really dooms day? Are there no creative solutions beyond Bush's exceptionally stupid plan of giving every American earning under $80,000 a year $600? When American economy found itself in quick sand beginning in the early '90's, real estate sales came to a near halt. Interest rates were around 13% in those bad old days. Property values dropped below the dollar amount of the loans on the properties. The news media was reporting then was the sky is falling and dooms day was upon us. Ha! Ha! Something magical happened. The lenders became original thinkers for a change and created short pay mortgage. It was a very simple idea that helped prevent some foreclosures and got the market moving a little. Lenders simply made their choice based upon which was more economically beneficial for them. Would they lose less money in a short pay deal or a foreclosure was their criteria.

Then, the lenders lowered their qualification standards for home loans. They got real creative and came up with all kinds of tricky, clever interest only or choose your payment plan loans. The sub prime market became a feeding frenzy. Good old Greenspan began boldly moving the interest rate digits downward.

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