The collapse of the housing market and financial industry has resulted in the normal amount of finger-pointing and searches for scapegoats, the latest of which have been the Community Reinvestment Act (CRA) and the Association of Community Organizations for Reform Now (ACORN). But the roles that have been played by these two acronyms have been far less damaging to the real estate market than that played by the major corporations and government institutions that manipulated markets and inflated the bubble in the first place.
Hundreds of local, regional, and national subprime mortgage lenders borrowed money from Wall Street investment firms to make loans to people buying or refinancing a house. When there were no borrowers left with good credit and stable income histories, these lenders gave mortgages to people with extremely poor credit, no credit, no income, and no assets. It was the easiest way to keep generating origination fees and the subprime industry did not have a stake in the eventual success or failure of the loans, as they were sold to Wall Street upon origination.
Wall Street investment firms like Bear Stearns, Lehman Brothers, and Merrill Lynch acted as middlemen in the process by providing subprime lenders with easy access to cash to make loans, then buying these loans from the lenders in order to securitize them for future sale as bonds. Investment companies charged investors to make these mortgage-backed securities, which investors thought were high-quality investments. Wall Street did not have a large stake in the eventual failure or success of the loans, except that the more loans they could securitize, the more they could sell to investors.
Bond insurers played a part by providing insurance on mortgage-backed securities, based on Wall Street firms' assurances that the mortgages were high quality when packaged together. A few might default, but not a large part of the entire group of loans. And anyway, with rising home values, the houses where families were unable to stop foreclosure by refinancing could be sold on the open market for more than the mortgage had been worth. So insurance companies charged a little bit to guarantee the securities, thereby making them look even safer. Insurers had a stake in the performance of the loans, but were convinced into believing that the bonds were of high enough quality to provide insurance on.
Rating agencies played their part by giving these bonds very high ratings, making them look to be very low risk, even though the bonds were promising to pay high interest rates. Typically, low risk means low return, but in the case of the subprime securities, low risk supposedly meant high returns. But the favorable ratings meant investors were willing to keep buying the securities. These agencies also had no stake in the success or failure of the loans, as they just provided their stamp of approval on them without ever having to own or invest in subprime mortgage securities.
The Federal Reserve lowered interest rates dramatically during the early 2000s, thereby making it much easier for banks to borrow and lend money. The greatest real estate bubble in history then formed, as anyone could get a loan at a low interest rate and no one had a stake in the eventual success or failure of the mortgages. They could just be securitized and sold to investors around the world or dumped on Fannie Mae and Freddie Mac and the toxic risk would be spread around the world. If the system collapsed, all of the players knew that the Fed and the government would step in to provide bailouts to prevent the recognition of the failure of the industry.
There is no doubt that ACORN, the Community Reinvestment Act, and other factors played a role in inflating the bubble and keeping housing prices rising far beyond sustainable levels, just as corrupt real estate brokers, mortgage brokers, and appraisers helped to overvalue properties in local areas. But all of these played merely supporting roles to the subprime lenders, Wall Street firms, bond insurers, ratings agencies, and the central bank that helped create and sustain the illusion that the housing market was in a phase of perpetual growth.
Housing Market Supply And Demand
The housing market has thousands of realtors scrambling. Wall Street says , "The market has hit bottom, and it may have a sluggish road back to the appreciation rates of the late 90's, which were 6% to 12%. The thought that is glowing in front of a number of Real Estate Agents across America today is the thought of obtaining an additional stream of income or creating one because it has now turned into a necessity, instead of a choice, like it was when the market was thriving. Many ask "What opportunities are out there to obtain an additional stream of income? " There are a variety programs offered out there, but I have found that there are so many, it is very difficult to navigate through all the mlm scams and schemes. Because there are so many people out there searching for a business that they can use their prior marketing skills to promote something for themselves, I want to offer some advice. Find a program that is backed by a larger entity. Many MLM companies have been started by people who may or may not have had much experience in running a company. But they were able start up an online business anyway. While there are I'm sure, many out there that were started that way, and that is great. But I would say it's safe to say, you are better off joining a company with a track record. And of course that goes for the founder or CEO of the company as well. I have been blessed enough to have found numerous companies that meet the standard.
One way you can tell if a program is professionally run is by simply looking at the quality of the presentation. Flash video presentations are the craze right now and that will only increase of course as the prices for such goodies on websites is only becoming available at affordable prices starting late December 2007. This feature on websites does show that they have put considerable thought behind their presentation and therefore, it will bring people in, like you. If you find other programs that look like they were made in study hall on a laptop, then keep looking.
Taking the time to understand any program and nature of how it works will take a few good hours of studying their website, and its back office and support system. Don't be afraid to ask the sponsor, " How does this stuff possibly work?" Getting a quick response is essential. If it takes your sponsor 3 days to get back to your first question, how will they act in a few months when you have a question and they already have your money? " I know, I am simply shocked.
Some of these potential opportunities for agents as well as others in need of an alternate income stream are proving to work and are part of a $250 Billion Dollar industry. All this money being exchanged over computers in living rooms and home offices across the world. Don't get me wrong, there is a lot of commitment involved in getting any program producing. How much? realistically, you are going to want to set aside at least 3 hours a day especially in the very beginning simply because you will have several specific things that you will want to do each day to drive traffic to your website. And this is where most people simply fizzle out at this point because they don't know the 5 or 6 things that are so simple, yet crucial to just get people to see your website. Does this sound familiar realtors? Yeah, it's not so different from selling houses or commercial real estate. You have a product that can make someone's life better, and you want to show it to as many people as possible. Except there's one big difference, you don't have to leave the house to get these things done each day. Does that scare you? To tell you the truth, it scared me a bit. I really had a hard time believing I could generate real income from inside my home. I can assure you, this fear will go away soon after your first sale online. When the first sale came, I felt like a different man. It's hard to imagine until it has really happened to you. But it will.
I will honestly tell you that if it were not for this next thing I am going to tell you about, I simply think it would have been almost impossible for me to get a good start in an online business. Short of reading piles and piles of books and spending hundreds of neck-aching hours trying every offer that comes along to help you, you really have little chance of knowing what exactly works. I was on that track. I had read many e-books, and even took a class on web design. But I still didn't know what I was really missing. But I was lucky. I found a mentoring team and found someone who really knows what it takes to market any business online. The partnership I have with my instructor/mentor made finding a reputable company to join and the initial process of setting up a marketing plan very enjoyable and effective. I nearly felt guilty knowing that others were struggling becasuse of a lack of information and I was rolling along. I want this for my readers. Don't reinvent the wheel. Learn from a group of like-minded people. Rest assured there is something you can get involved in that will produce monthly income and is manageable out of your home. That is a given. But, the programs just end up frustrating you, which ultimately ends up in a waste of time and money. Finding a team that knows what is working is your best bet.
You can use that same real estate mentality, organization skills, follow up tenacity, and combine that with the program you choose, treat it like a business and you will be shocked to see how it is not rocket science getting people to land on your page. I am as Skeptical as they come, you may be no different. But I committed and gave it a true effort to learn the ins and outs of a program and followed some pretty basic steps anyone can do, and got some great results. Now I have people visiting my sites and making purchases. It's that simple. But you have to do the active work, yes real specific things that will drive traffic to your site and you will make sales. Please remember, there is a huge industry that has not capped and it offers many freedoms. The residual potential is tremendous! I'm not telling anyone to quit their day job, instead, spend some time looking for a good company, promoting good products and services, and ones that are being stated by people who have a good track record. The market will come back, someday, until then, try something not so different! It might make something happen that is really different!
Both Nick Adama & Chris Namie are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Nick Adama has sinced written about articles on various topics from Foreclosure Help, Bankruptcy Law and Foreclosure Help. Nick writes articles to give to homeowners. Visit his site to read more about the process and what to do to save your home:. Nick Adama's top article generates over 90500 views. to your Favourites.
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