Sunday, March 7, 2021
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The Indignity of Home Finance and More

The righteous pontificators claim the housing bubble was the product of Barney, Fannie, Freddie, and policies that encouraged individual home ownership. Their perspective is that of millionaires without a nickel's worth of contemporary financial or life experience. Ethically corrupt lenders fostered liar's loans and the financial firewall of spurious derivatives.

There are many reasons why the real estate market is in the tank and that lenders are much more cautious than during the go-go days. But there is no good reason for the whipsaw lending environment that has turned the home buying experience into an undignified series of insults. Today's buyers are paying the bill for financial institutions that kept a blind eye to economic reality because they knew they could assign unwarranted risk away from themselves through derivatives. That combined with a very forgiving market created a highly risk tolerant environment that encouraged unwarranted loan approvals. Bob Brinker has it right when he says that never did the government tell lenders: "Go forth and make bad loans."

Recent experience is a contrast in then and now. A decade ago I purchased a home. Closing was a painless process that I should have paid more attention to, but was so easy I didn't give it a second thought. My wife and I were in and out of closing in less than an hour, no questions asked on either side of the table. Last fall, we decided to relocate and began a painful and disheartening journey through Virginia culminating in a tortuous and insulting process that had us very close to just walking away.