Just Another Victim of a Vicious Cycle

Two days ago, I went to grab a cup of coffee with one of my interns. As we approached the coffee shop, my intern spotted a well known former broker within the Middle Eastern Society of Southern California. At one time, this person ran a full mortgage corporation with over 50 loan officers and direct open lines of credit from Deutsche bank.
Sending my intern to pick up the coffee, I approached him as we were friends in the past. He was shocked to see on the streets of Glendale but still welcomed my sudden appearance. Immediately, we started catching up and the topic of real estate came up. I asked him about his corporation. A sad and grim look took over his facial expressions. He started by telling Home Builders Companies me about the good old times when approving borrowers was very easily done. He closed his operation after trying to keep it afloat after the Real Estate market crash. During this process, he spent over a half million to cover over head costs in order to avoid firing and laying off so many workers. A tear dropped behind his sunglasses as he continued to speak.
I couldn’t help it to ask him to stop. My intern came back with the coffee and I sent him back inside to get my old friend a drink. I asked him about his current source of income. He told me that he works within one of the major banks in the mortgage department. I made good work of this movement in the conversation and brought up the Obama plans. He replied back and stated that it has too little effect on the volume within the market. I asked him about the new refinance programs. He told me that this is his new role. According to him, those new programs are only applicable to existing government backed mortgage plans such as FANNIE MAE.
In addition, the new plans carry a new stipulation: only one lender on the property. If borrowers have more than one lender, they need to obtain releases from their debt. I gazed at him with amazement. He turned and pointed at the street and said: “Look John … see all the people in our sight. The Real Estate market will continue its decline for another three years at least. Everyone will feel its pinch.” My intern returned and handed him a cold cup of iced coffee. He took a big sip and began to talk about REOs (Real Estate Owned). He indicated that most banks have a huge inventory which will be hitting the market within eighteen months. I told him that if banks do such a thing, real properties values will plummet even lower. “They don’t care”: he replied back to me. Taking another sip, he added that the only reason banks are withholding such a huge release are the real estate associations.
We continued to talk for a little bit only to be interrupted by his need to return to work. Holding my cup of coffee, I took a long walk with my intern. After a ¼ a mile, my intern asked me about my friend. I looked at him and said:
Just another Victim How Long Does It Take To Sell A Luxury Home of a Vicious Cycle.

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