The housing / lending crisis. You have your list of usual suspects. Lenders, borrowers, the government (damn Greenspan and his cheap money!).
Now, of course, blame falls at the feet of real estate agents.
It is a scene millions of Americans have been in — sitting next to a real estate agent at closing to sign the loan contract and other papers for a new home. Often, the buyer has spent months with the agent. And to hear agents tell it, they are indispensable guides through the hazardous home-buying terrain.
How is it, then, that millions of borrowers took on toxic subprime mortgages that could cost them their homes? Why did their agents not warn them off?
While much criticism has been leveled at subprime lenders and mortgage brokers, real estate agents have yet to receive their fair share of the blame for the subprime mess, says Shanna Smith, president of the National Fair Housing Alliance. “I think the greed factor works with agents as well as loan originators,” she recently noted.
Thank you Shanna, I appreciate your opinion. I would have responded earlier, but I was busy counting all the hundred dollar bills hidden under my mattress.
Do you think some agents share some of the blame?
Sure, I guess. The key word is “some”.
A word that is missing from this article.
Actually, to be fair, the author points out a couple of important points regarding the relationship between buyer and agent.
“You work for whoever pays you,” [said Wharton real estate professor Georgette Chapman Phillips], adding: “Should a broker tell a buyer, ‘You realize that you’re in completely over your head here?’ — when the mortgage company has already said to the buyer, ‘Sure, you can have the money.’ Why would the broker ever do that?”
It’s more than that, even.
It may surprise you, but most agents spend little time discussing financing with their clients. (Perhaps it’s different in the suburbs or in other parts of the country, I don’t know.)
When clients come to me, I ask them if they are pre-approved for purchases in their price range. If not, I suggest strongly that they do so, since any offers they make should be accompanied by a letter from a lender.
But, I don’t get involved beyond that. It’s between the buyer and the lender. I may offer information on loan procedures, but the dollar amount and interest rate, etc., is out of my hands.
One other thing – I haven’t attended a closing in over a year. My clients aren’t “sitting next to a real estate agent” at the closing table. There’s usually no reason for me to be there, so I skip it. At closing, it’s a business transaction. Between buyer and seller and lender (with help from an attorney).
Source: The Subprime Blame Game: Where Were the Realtors? – Knowledge at Wharton
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