Mortgage Flu Hits Real Estate

As home foreclosures increase daily weakening real estate markets a new world flu has struck. The subprime crisis evolved into the national Buying the American Dreamhousing crisis only to become the mortgage flu.

Some 89 percent of people surveyed by Housing Predictor blame mortgage companies for artificially inflating the housing market by selling too many mortgages to those unable to re-pay at higher rates. Five-hundred people were surveyed for the study, which indicates a major rift is developing between the nation’s homeowners and banks and other lending institutions.

In a thorough study conducted by Housing Predictor of all 50 U.S. states we found that 44 states are ailing in the midst of falling home prices with declining sales, and all have housing markets projected to deflate further.

Home sales are still occurring in the majority of local markets. More than 250 markets Housing Predictor tracks were studied. All have declining real estate sales, and there was not one single market that had seen an increase in sales activity in the last 12 months.

All markets are seeing fewer real estate transactions that are requiring mortgages. The national real estate slump has paralyzed many lenders businesses, and thousands of mortgage lenders, small and large, are unsure if they will be able to sustain the crisis to stay in business. Already, 170 have either closed their doors or filed for bankruptcy.

Consumer confidence is down. Unemployment is rising. Nervous investors on Wall Street are unsure of the economy, and as Housing Predictor forecast the nation seems to be finally agreeing it’s heading into a recession. Foreclosures are already at record highs.

Consumers taste for mortgage companies and lenders is falling as more and more people become uneasy with a growing sentiment that lenders became too creative with new adjustable rate mortgages for those with good credit, and subprime loans made to people with poor credit scores.

The crisis has gotten so out of hand that many people surveyed added that it was obvious to them now that banks were only interested in making more money on the mortgages they made, and did not care about their customers. Some 83% surveyed, all of whom are home owners, said they hope they never have to get a mortgage again, illustrating the fact that Americans have lost confidence in the mortgage and banking industry.

The majority of homeowners at least at first do get mortgages to buy real estate in the U.S. But the study shows a large dislike for the way mortgage companies and lenders have made loans.

This sort of distaste for mortgage money is unprecedented in U.S. economic times and comes after the nation’s economy has boomed for more than a decade and flourished into the greatest economic expansion the world has known. Globalization has been paramount producing new record highs on Wall Street, but the real estate boom has gone bust. Real estate enjoyed great booming markets until the flow of money to provide these new creative mortgages was shut off in mass by Wall Street.

The lack of mortgage money, which was loosely provided to home buyers has been tantamount to a near freeze of mortgage money for many who want to purchase or refinance homes. The falling values of property have stopped hundreds of thousands of home owners from refinancing, adding to the nation’s foreclosure epidemic.

It is evident now that the fallout from the mortgage mess is massive and has clearly worked its way into the overall economy. A sweeping emergency fix from Washington D.C., with a new program to stop the foreclosure crisis is the only possible remedy. But for a program to work lenders would have to be forced to cooperate by new laws to protect the public good.