How did we get here? Arizona’s rate of foreclosure is at an all-time high. Countless families have lost their homes and foreclosed properties flood the market, dragging the housing market down and making it more difficult to sell a home before it is foreclosed. It’s a vicious circle, and analysts can’t decide if the market is rising or falling.
Change in Procedure
As recently reported at AZCentral.com, state officials are calling for change in the way lending is carried out. Angered by the recent halt on foreclosures due to processing error, attorney generals all over the United States are demanding procedural change. An industry standard procedure for loan modifications, a more efficient way of processing requests, and a relief fund fueled by lender’s money are some of their primary requests.
Is it the Banks?
It seems pretty much agreed-upon that the banks are the ones that put us into this mess. Predatory loans and other shady business practices have been uncovered industry-wide, and the market was bound to suffer if and when the economy began to recede. As the foreclosure rate increased, home values dropped at a faster rate than they already were and things got worse and worse. Just as the market shows signs of promise, the banks have mucked it up again by being ill-equipped to handle the mess that they started in the first place.
Political Mistakes?
But the banks shouldn’t be taking all of the blame. The economy went from bad to worse to devastating relatively quickly. Political mistakes have been made by on all sides, and the tension of party politics is at an all-time high. Homebuyers that didn’t understand their mortgage terms were as much of a problem as were mortgage terms designed to trick the home-buyer. The flight of businesses and factories from once prominent areas created ghettos overnight.
Change in Policy
Attorney generals are probably right: we need to take a good look at the policies of our lending agencies. It’s the best place to start and the easiest way to safeguard ourselves from this happening again in the future. But once we dig our way out of this mess, we will need to be more objective about what happened to accelerate this awful housing market. After diagnosing the problems, we’ll have to focus on all of the symptoms, not just bank policy.
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