Did We Learn From the Past?
Over the holiday I had the opportunity and actually had the time to watch a movie, “The Big Short.” Have you heard of it? If you lived through the housing bubble burst that started in 2008, you should make a point to watch it. It can be found on Netflix or in a Redbox near you.
Yes it had “A” list stars in it, Brad Pitt, Steve Carell, Ryan Gosling, and Christian Bale (to name a few), but it was so much more than great casting. The Big Short is a movie about the housing crisis in 2008 and how a few men predicted it and ultimately bet against the housing market because they took the time to do what no one else was doing, they looked.
All the mortgage and banking lingo can get really confusing, but the directors took the time to explain what was happening when the banks created a bubble that pulled the rug out from millions of Americans. Definitely make sure you’re paying attention, this isn’t a first date movie.
Lenders were loaning to customers who didn’t meet any qualifications and not explain that in 3, 5, or 7 years their mortgage payment would dramatically rise. These loan officers would give Variable Rate Loans to customers but the customers wouldn’t understand that their payments could, and most likely WOULD, rise so much that they wouldn’t be able to pay. When this happened more and more people would begin foreclosing on their mortgage, banks would lose the money, stocks would drop.
When the dust settled, the US Government bailed the big banks out and gave them a simple slap on the wrist. Oh, all except one guy who went to jail and he wasn’t even a large player in what caused the crash. I hate to say it, but I don’t think these banks learned anything from the crisis of 2008. Taxpayers are still paying for their mistake when they became blinded by greed.
In my business, I am still seeing people that shouldn’t get qualified for a loan, out looking for a home, why? I’ll tell you why, because some lender or agent is NOT looking out for their clients best interest, they are only interested in a pay check.
Lack of inventory, throughout the country, has created a rise in the housing prices but the lending laws are loosing up as well and together that is helping to create another housing bubble.
With a new President about to move in the White House, one thing is for certain, things are going to be changing, whether that will be a good or bad thing is still to be determined. I would hope that with all his real estate holdings and background that he would be looking out for his interests’ and the American peoples’ by regulating these large banks from causing another worldwide economic crisis.