Books

  • Jeff Michael: Repair Your Credit and Knock Out Your Debt

    Jeff Michael: Repair Your Credit and Knock Out Your Debt
    I highly recommend this book because I wrote it.

  • Edie Milligan: Tips from the Top: Targeted Advice from America's Top Money Minds

    Edie Milligan: Tips from the Top: Targeted Advice from America's Top Money Minds
    I have about a dozen entries in this book.


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Comments

Jeff,

I have to go back and wonder if this is a real problem or just a perceived problem. Yes, lenders are going to take a hit. But will it be any worse than the economic freefall (tongue securely planted in cheek) of the burst of the NASDAQ bubble and the 20 percent subprime foreclosure rate of 2000 to 2003? What we don't seem to be looking at here is that, with housing, we still have a tangible asset that rarely loses all value.

I've said it before and I'll say it again. From a purely economic standpoint (with no moral value added for the impact of people losing their homes that, from these reports, they shouldn't have had in the first place) this may turn out to be a real boon to redevelopment companies and those on the cusp of credit worthiness as house prices go down to match the "real" value of the asset.

Alex

I agree that the housing market needed a correction, and I suspect you're right that the upside to all this could be positive.

And while this is a real problem, it's been way overhyped by the media--they predicted economic meltdown in the housing sector for years, and when they finally got some evidence of it, (in the form of the current correction) they couldn't contain their glee.

As for lenders, inasmuch as they were too indiscriminate in their lending, the mortgage companies deserve to take a hit on this. (Too bad Fannie Mae & Freddie Mac likely won't get their share of the punishment, though).

I only hope potential homeowners learn the right lessons from all of this:
1. Improving one's credit to qualify for a loan isn't just a formality or a hoop to jump through. Credit scoring is a consistently accurate indicator of the likelihood of success. Taking shortcuts to "beat the bureaus" leaves you vulnerable, in a long-term loan that you probably can't afford.
2. Adjustable rate mortgages adjust--upward. One shouldn't get into a loan without fully understanding how it works.
3. Homeownership is still a very good thing; it's the essential first building block to real wealth accumulation.

The bottom line is, people should become homeowners, but not until they're really ready. And if they're not sure whether or not they're ready, an accurate credit record is a good indicator. Despite what mortgage brokers might tell you, if you have a credit score of 600 and no money to put down, you aren't ready to buy a house.

Here's a article on illegal credit repair scams, emails that promise instant relief and what you can do to protect yourself from these scammers:

http://bestbraindrain.com/2007/08/07/credit-repair-scams--what-they-are-and-how-to-avoid-them.aspx

Don't get taken by credit repair scams.

B. Yeltsin

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