Buying Foreclosures & Distressed Homes in WNC / Asheville NC: 828.216.5425
Article courtesy of: http://nypost.com/2014/11/16/dear-john-no-banking-on-foreclosures/
Dear John: I read an article in The Post headlined “Many New Yorkers living in foreclosure limbo” that said banks are dragging their feet on foreclosures in the NY metro area.
A few years ago, I settled numerous credit-card account debts, and in the process, without fail, every bank representative that I was in contact with harped repeatedly that it was important that I “get back on track.”
So it puzzles me as to why they are not taking their own advice to get back on track and are stalling eager homeowners who want to finally put this Great Recession in the rear-view mirror! What do you think? E.D.
Dear E.D.: Ah, banks are not taking their own advice! What a surprise.
I have no idea why banks won’t help homeowners out, but I can guess. One, banks are bureaucracies that don’t function swiftly. And the longer you have an issue with a bank, the more the paperwork piles up and the harder it is to get through that paperwork.
Or, two, banks don’t believe houses will retain the value that has built up over the past couple of years. So they are afraid that they will refinance — or even take control of a house — and be caught in the next down cycle.
I think both of those reasons are coming into play.
Dear John: We wanted to get your opinion on the mortgage interest rates next year.
We are looking to buy another house and move, but with two young kids, moving in the winter is difficult.
However, we are very worried about the mortgage interest rates rising next year, since quantitative easing is ending.
We live in New Jersey so, as you know, prices in decent neighborhoods are through the roof.
Would you advise to sell/buy as soon as possible (i.e., the rates might skyrocket 1 percent or more), or should we stop worrying and wait until spring? I & M
Dear I & M: I have no idea what you should do because there’s no telling where mortgage rates will be next year.
Last week, for instance, rates on a 30-year mortgage went from 3.92 percent to 4.15 percent overnight just because QE was ending. Then people gave more thought to the matter and rates dropped to 3.9 percent.
There is no question that interest rates are artificially low and the bond prices (which move in the opposite direction of rates) are in a bubble that could pop at any moment.
But will that moment come in December or in April or sometime in 2020? Who knows.
One key factor, of course, is what the Federal Reserve says and does. But with the economy still not performing well here or overseas, the Fed is likely to be frozen in place for a while.
But other factors influence interest rates more than the Fed does.
If the world economy, for instance, suddenly booms, all interest rates could rise rapidly. There’s probably little chance of that happening over the next year.
Or if foreign investors — meaning, the Chinese — decide they don’t want to buy US government bonds anymore, that, too, could cause rates to rise.
Here’s my personal experience: It’s better to let housing prices rather than interest rates influence your decision. You can never reduce the amount you paid for a house. But if you get a higher-than-necessary interest rate, you can always refinance when rates come down if you stay in the house long enough.
In other words, a bad purchase price is forever. A bad interest rate can be changed.
And when rates do go up, housing prices will come down.
Dear John: You have been saying the same crap since January 2009 — you know, since Obama’s decisions saved your butt, mine and the rest of this country from the depression the GOP policies had us heading for. If you have a hard time remembering, look at the mess Kansas Republicans made of their state. D.H.
Dear D.H.: Yep, I’ve been saying since 2009 that the economy wasn’t growing very much, that economic data were misleading (and in some cases, falsified) and I — most recently — predicted that this would all be important in the most recent election.
Yep, I was right.
As for 2009, if you want to credit anyone with saving the US financial system (which needed saving mainly because Republicans and Democrats in Washington panicked), you’d have to give credit to the Federal Reserve, especially to Ben Bernanke and his radical money-printing operation.
But Bernanke went wrong when he kept quantitative easing going much too long. He didn’t have an exit strategy, so like the guy on a roller coaster who can’t unbuckle his seat belt, Bernanke kept going round and round with QE.
And the country’s now dizzy — the rich are richer, middle-class savers have lost trillions in interest income and nobody, including the poor, can find an adequate number of good jobs.
Other good things happened, too. Borrowers got better deals, including the US Treasury, whose deficit and overall debt would be much worse if rates were at normal levels.
The trouble is, in this environment, people aren’t confident enough to borrow and build — no matter what the rate.
Oh, wait, I forgot to mention Obama. Was he President through all this? I remember he gave a few speeches so, yes, I guess he was.