Foreclosures Far Too Frequent

By: Jay Heinrich


There has recently been no shortage of reports on the trouble that the real estate market is growing towards, and in some cases already in, right now. Some of the hard times are being blamed on the huge number of subprime loans that were issued during the recent boom of housing in Texas and across the nation. These subprime loans are, more often than not, issued to borrowers with less than decent credit scores. While the word subprime refers to the credit of the owner and not the interest rate on the loan, high interest rates go hand in hand with these types of loans. These loans are extremely risky due to the history of the borrower. Now, because of many of these loans turning into foreclosed homes and unpaid loans, lending companies are paying the price.

Here's the deal. To stop the huge number of foreclosures, stop giving out so many of these subprime loans. The math is pretty simple. Less loans equals less possibility of foreclosure. I understand that people need a place to live and will need loans from time to time, but now it is not only effecting the borrowers. This has started to become bothersome to people that do not depend on these subprime loans. Many lending companies are having to file for bankruptcy because they are not working with the lendees. If they hadn't given out so many of these loans, they might still be in business.

According to an article by Enrique Rangel from amarillo.com, Texas Attorney General Greg Abbott has spoken up and offered his thoughts on what it would take to turn the corner on these problems. He presented five things lenders can do to reduce the amount of foreclosures in the market and make it a little bit easier on the lenders and lendees of Texas. These include improving communication with consumers, providing solutions for borrowers with adjustable-rate mortgages, and waiving penalties and fees while the company works with the borrower to keep their loan.

Winner, Winner, Chicken Dinner. This should apply to every day life, not just a business like real estate. I'm glad someone has come forward with some ideas, but it shouldn't take a politician to come up with something like that. Just because someone screws up once you shouldn't write them off as worthless to you. Taking the time to talk to someone to figure out what they can do to help not only themselves but you as well makes a little more sense than just ripping away whatever opportunities they might have to be successful. Don't make it all about you. Make it about them as well. If someone feels more comfortable with you, they are more likely to be inclined to do whatever they can to make the situation good for all parties involved. So instead of automatically sending things to collections and just chalking it up as a loss, companies should take the time to work with the consumers to come up with solutions to the problem.

Senator Eliot Shapleigh, D-El Paso, is so worried about the consequences of a real estate bust in Texas that he asked Governor Rick Perry to call a special session next year on the issue. Perry has yet to respond, but when he does, I hope he is as open minded on the topic as Attorney General Abbott is and makes the decision to at least call a special session to discuss this matter. If not, the real estate bubble in Texas will no doubt be ready to burst.



Rangel Article: http://www.amarillo.com/stories/102207/new_8745435.shtml
Information on Subprime Loans: http://en.wikipedia.org/wiki/Subprime_lending