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Perfect Storm PDF Print E-mail
Written by AmericanElephant.com   

When various weather events coincide to create a massive cataclysmic event, it is called a perfect storm. It is a rare occurrence, but very devastating.

When a declining economy and housing market coincides with Lender consolidation, Wall Street influence, and mis-guided lawmakers... what you have is an economic perfect storm that is going to have serious and potentially longterm effects on the economy and the middle class.

That is exactly what is happening in North Carolina.

North Carolina lawmakers who have no clue about the mortgage business, without the consultation of people in the mortgage business, have decided that they know what's best for citizens in regards to the mortgage business. Today, Governor Mike Easley signed House Bill 1817 into law, that takes away many of the subprime options hardworking consumers once had. Interestingly, banks are immune to this legislation, which makes one wonder what the true motives were, but that's not the point of this argument.

The bill is so shortsighted, and all those who voted for its passage, along with the Governor who was so eager to sign it, should be held accountable for its consequences.

  • Fact. The housing market in North Carolina is better than most states, but is still flat or declining.
  • Fact. The economy is currently volatile and not all that great.
  • Fact. The prime rate is around 4 points higher than it was just a few years ago.
  • Fact. Mortgage interest rates, while still relatively low, are higher than they were a few years ago.
  • Fact. Many lenders are currently closing or restricting guidelines due to various forces in the market place.
  • Fact. Property taxes are increasing every year.
  • Fact. Many, many consumers are currently facing, about to face, or have just experienced a substantial increase in their mortgage payments due to rising interest rates.

So what does our legislature and governor decide to do? For the subprime customer, who is more than likely already feeling a credit and cash crunch, many of whom are in mortgages whose interest rates might be going up... they take many of the options off the table for them, so they can't refinance to get out of their loan.

AND, when those same customers are stuck in a mortgage they can't afford, let's pass a new TRANSFER TAX, and take even more of the equity from their home so they get nothing.

When the housing market is in decline, rates are higher, lenders are closing, and adjustables are adjusting... the last thing you need to do is take away people's options and then charge them a penalty if they sell.

That is a perfect storm... and is only going to cause more foreclosures in this state... the exact thing the legislature and Governor Easley were supposedly trying to prevent.

When people are losing their homes and have nowhere to turn, I guess they can cross their fingers and buy one of Easley's precious lottery tickets. What other option will they have?

 
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