Rate Freeze for Adjustable Rate Mortgages
I feel the need to at least give my two cents on the issue of Bush's legislation to freeze the rates on some adjustable rate mortgages (ARMs). This legislation is meant to aid the people who could potentially face foreclosure due to the expiration of their original interest rates on ARM loans.
In some areas of the nation (i.e. California, Nevada, Florida and others), I can see where this policy will definitely help. There are many people in these areas that couldn't afford to purchase a home due to the increasing home prices. The only option for them was to try one of these riskier loan products and hope for continued appreciation.
This is not necessarily the case in Central Minnesota. Although there are some people in the St Cloud area who have chosen to go with one of these riskier ARM loans (Note - not all ARM products are bad - find a good lender that will get you in the right loan product for you), the majority chose a less risky loan or went with the traditional 30 year fixed rate mortgage. I believe that freezing the interest rates around St Cloud MN will only lengthen the time it takes for our market to fully correct.
Instead of this legislation, I think we should let this downturn run its course. If we freeze interest rates and delay this problem into 2009 or even 2010, many home owners might see their home values dip even further than they necessary. I think that one year of a market flooded with foreclosed properties is in the majority of the St Cloud area's best interest over 2+ years of sales stagnation and falling prices.
I know that this is not the best alternative for many of you who might be currently facing a foreclosure process. I'm sorry that your situation has turned south and things are not working as originally planned. Whether it be purchasing advice from a poorly informed lender, real estate professional, or just bad judgment on your part, the problem needs to be fixed. The sooner the better. Call a local real estate professional that you trust so they can try to help you out of your current situation if it is fixable. If you have just plain given up, please don't trash the home as you leave. That affects everyone in the neighborhood and community more than the bank.
I'd love any of your takes on this issue. This is just my opinion and thoughts on the issue. Please post your thoughts or questions here for answers and review.
Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud
www.StCloudEdina.com - Search the St Cloud MLS
www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud MN
