Greed and Ignorance Responsible for Housing Crisis

April 30, 2007 - PRLog -- United States April 30, 2007--Across the country, the rate of foreclosures has dramatically increased.  Analysts and industry professionals have all weighed in with their expert opinion often attributing the crisis to the natural law of “market corrections” and uncertain economic times.  However, the one admission that no one seems willing to make is that we are in this mess because of greed and ignorance.  “Butch” Charles Grimes, host of “We Talk Real Estate with Butch Grimes” is not afraid to make this admission.

Grimes does not limit his criticism for the industry but also blames consumers for their role in this crisis.  Greed not only drove the industry to find more borrowers but it also drove consumers to accept loan terms and mortgage notes which were unreasonable.  Buyers did not read the fine print on their loan packages nor did they fully take in that after the purchase, comes the responsibility of home ownership.  Greed and ignorance are never a good combination and that is clearly evident in today’s market.  

“Real estate professionals must help potential homeowners do a comprehensive assessment which includes how they would handle their mortgage if their financial situation changed, “states Grimes.  Grimes continues, “Professionals can no longer sell adjustable rates mortgages (ARMs) with abandon on the basis of interest rates remaining low.  Many borrowers are now in foreclosure as a result of ARMs. No one ever asked the tough question of what would happen to the monthly payment if the maximum rate was reached.  Instead they only remembered the loan officer telling them not to worry because they could refinance in 6 months and get a better rate.”   Grimes believes that agents must educate themselves so that they can educate borrowers.  On the flip side, borrowers must READ first and ask questions before signing on the dotted line.  It really does take two to tango and finger pointing is not going to solve the problem.  

Grimes wants the industry and consumers to take more responsibility for its transactions.  He stresses that financial education must be a priority believing the industry must help some borrowers delay buying a home until they are ready.  Says Grimes, “New Cadillac Escalades, Mercedes, and Range Rovers aren’t mandatory for the new garage.   What about a savings plan so that you’re prepared for home repairs and other emergencies? “Grimes teaches that new homeowners should first get acquainted with their new investment and take it for a spin before they invest in spinning rims on a hunk of metal that they cannot call home.  

Grimes admit that his views may not be popular but he prides himself on saying what others are afraid to voice.  “I would rather offend a few by being truthful if it will spare someone from buying a home that they are simply not financially or emotionally prepared to own.”  In fact, Grimes believes that home ownership is not for everyone.  “Owning a home is a privilege not a right”.  Not everyone is prepared to handle the financial and emotional responsibilities that come with owning a home and some folk should just be turned away.  

According to Grimes, professionals must be willing to partner with their clients even if that means selling them a smaller mortgage or encouraging them to delay their buying decision until their financial house is in order.

The industry must demand more from its professionals.  Not everyone who can pass a test is qualified to work in the industry.  If you sell a customer a suit that doesn’t fit they can return it, but selling a customer a bad mortgage is not something they can return.  

Conversely, consumers must demand more of the real estate industry and be willing to take the time to become educated before making a major purchase.  Grimes realizes that we will never eliminate foreclosures or missed mortgage payments but states “when consumers and the industry work together we can certainly help many avoid a fate that has become all too common.”


About Butch Grimes
Butch” Charles Grimes is a recognized real estate authority, often called upon by national and multi-national companies for guidance on achieving success in the ever-evolving minority emerging markets. Grimes is Executive Producer and co-host of the weekly radio show, “We Talk Real Estate with Butch Grimes” on KTYM, 1460 AM in Los Angeles.  He also writes a monthly column as the, “The Real Estate educator” for many statewide and local newspaper like The L.A. Focus Magazine.  Despite his many obligations, Grimes is now on the CENTER STAGE National Speaking tour sponsored by Wells Fargo.  

For more information contact Lupe at  llozano@teamequityla.com or phone (323) 750-3690 x. 201.



# # #

Website: www.WeTalkRealEstate.com