Introduction
An introduction traditionally explains a book's subject matter and what led the author to write about it. At the very front of a book, the introduction is important real estate, too important, I think, to waste explaining to you,of all people, what the subprime real estate and mortgage crises is. Chances are you have not just been rescued from a deserted island and opted to shop for a book before going home to reunite with your loved ones. I'm willing to bet you've heard about the crisis several times within the past twenty-four hours alone: on television before you went to bed last night or as you ate breakfast this morning, or maybe on the radio as you drove to work. You'll probably hear about it again on the news when you get home tonight, and again and again daily for months, maybe years to come. You know about the foreclosure mess our country is in, or perhaps you are one of the victims of subprime lending practices. Why else would you have picked this book? Yet, even with everything you've heard on television, the radio, in the newspapers, at work, or from your friends, or perhaps because of it, you have unanswered questions.
When I began writing it in early 2007, this volume was going to be a book designed to help those who had lost or feared losing their homes or other real estate to foreclosure. At the time, the powers that be predicted 3 million of us would fall into this trap. But this book, like the subprime crisis, has evolved into something much bigger than what it first appeared to be. Foreclosure is replacing the American dream of homeownership as a way of life. If this includes you, you know how utterly impossible it's been to navigate the Kafkaesque automated bank voice-messaging systems. Even worse, when you finally do reach a real live human being you can't understand a word of his offshore call-center accent. And he doesn't seem to have a clue—or give a damn-about helping to solve your problem. You simply want to know how to save your home and your credit without losing an arm and a leg in attorney fees and bank penalties. Maybe you want to make sure you are never put in this type of situation again. You may want to know how to get back at the mortgage broker or realtor who got you into this mess in the first place. Or maybe you want to get a better handle on what the $700 billion bailout means to you especially since the money is coming out of your pocket as a US taxpayer.
Enter Foreclosure Nation. As a real estate lawyer for almost twenty years, I've enjoyed training hundreds of people from diverse backgrounds in real estate, mortgage and law-related industries. Because we all have different levels of experience and attention spans, this book is organized into logical sections that will allow you to skim already familiar topics and refer back to subjects you are less comfortable with. Rest assured, the concepts are a lot less complicated once someone shows you what the legalese means and the dynamics motivating the people you must convince to help you. The goal of this book is to explain the pieces that together created our nation's subprime crises in the user-friendly way needed for average Americans to fully see and plan for the big picture. For those more inclined to enjoy the nitty gritty details references to resources are included so that you can conveniently access additional information about a certain topic.
As the subprime crisis evolves, it's becoming increasingly clear that this is not your father's economic event. The savings and loan (S&L) crises, the bursting of the dot com bubble, and similar historical events exacted their heaviest toll on those people who chose to play. But the subprime crisis is not playing favorites. Because of the crisis, real estate and business credit is eluding all of us. Record-high fraud and the financial losses it is causing will cost all of us. Local governments are cutting services to everyone in their jurisdictions. We're watching helplessly as all of our real estate values melt away. Every corner of Wall Street and global markets are feeling the impact along with each and every one of us who has a horse in the race. Consumer spending, corporate growth, new jobs, and our country's gross domestic product are all stumbling as our collective American pride, pocketbook, and psyche—along with global confidence-continue to shrink. Still, no one knows where in the world all the bad debt will land or whose wallet it will drain the most. A lot of this debt is showing up as part of the investment holdings of companies that our pension and retirement funds bought stock in, meaning, we'll continue feeling the burn when we try to retire. Concerns about systemic discrimination, widening socioeconomic gaps, and even a lengthy recession, are surfacing amongst the overall distrust of Wall Street risk assessment valuations and bank balance sheets causing the stock and financial markets to have jitters that manifest themselves in wide up and down daily swings of stock prices. Now that government's pulled up a seat at the table, it's anybody's game. Winners can become losers overnight (and visa versa) depending upon how Uncle Sam plays his cards.
The bottom line is that even if you considered the subprime crisis someone else's problem in early 2007, you've since discovered that if you have a home or any other real estate, a business, a dollar invested on Wall Street or anywhere in the American economy, or an interest in our country's moral fiber and its elected officials, you're at least curious, if not outright concerned, about what foreclosures in America will mean to Ii>you. This is precisely why this book will be of value for even those readers who managed to avoid the temptations of the real estate bubble, but who now see that there's no way on earth they can avoid the impact of the choices other people have made.
We've been hearing and reading news reports of first the subprime and now the broader economic puzzle for months. Some cause us to have an "aha!" moment; others raise more questions than they answer. We all count on the mortgage loan application processes to make sure we'll be able to repay the money a bank offers us. We place our good faith in the nation's mortgage industry without realizing that its infrastructure is contrary to our best interests. We trust bond-rating agencies implicitly, naively holding firm to the notion that "AAA" ratings are what Wall Street brokers buy all the time. We assume that regulators and government officials understand the idiosyncrasies of investment houses and brokerage firms and the impact their decisions will have on individual investors and on our country as a whole. In fact, we are little more than mere guinea pigs in trial-and-error legislative and regulatory experiments.
In bite-size, easy-to-follow sections, I will connects the dots for you between what realtors, banks, builders, rating agencies, Wall Street, and our government have really been up to and how they've affected us all, all the while providing solutions you can implement now. I'll also pose bigger ethical questions and conflicts of interest that could affect your pocketbook and the way you vote in the coming years.
You'll want or need to pay close attention to what follows, if:
- You've lost or may lose your home or other property to foreclosure, or you're starting to think it may make financial sense for you to give your property back to the bank
- Your real estate investment is worth less now than in was in 2006 or your stocks or other investment values are down
- You want to understand what the subprime and broader economic crisis is all about or when the real estate market will turn around
- You're thinking about investing in real estate but want to know when to buy, at what price to buy, and when you will be able to resell and make money, or you're wondering what types of opportunities the subprime crisis has created for making money
- You're having trouble trying to sell or refinance a home or other real estate
- You're having trouble getting credit for your business or your business sales are down
- You've lost your job or can't seem to find a job
- Your real estate taxes, insurance, and homeowner or condominium association costs seem to be too high and you'd like to try to lower them
- You're thinking about suing a realtor, lender, mortgage broker, developer, or Wall Street firm, or you're a realtor, lender, mortgage broker, developer, or Wall Street firm at risk of being sued
- You want to know what your legislators and regulators have done and what they plan to do in response to the crisis
In short, if you want to make the best financial choices over the next few years or just want to be informed without spending weeks or months learning, I offer an easy, sometimes amusing read, that fills you in on everything you need to know about the crisis as it relates to real estate, mortgages, Wall Street, and the economy. I'll share practical tools and resources designed to help you make educated choices, avoid loss, and even benefit from subprime-related economic shifts. I'll expose how we got here, how the systems really work, where we are headed, and how we can fix what's broken, while demystifying complicated, often intimidating financial and political processes that occur for the most part, behind closed doors.
For those of you who always find the glass half full, not to worry; at the end of the day, banks, builders, realtors, Wall Street, and our government all answer to you as consumers and voters. We'll see why "experts" are predicting that things will begin turning around in 2009. In the meantime, I'll attempt to empower you with the knowledge to choose wisely.