How to Prepare for Consumer Worries on Mortgages

Commentary By Walt Baczkowski

RISMEDIA, Oct. 1, 2007-Having been through several cycles of tightening mortgage credit, we should have anticipated the questions that started this past month: “Can we sell our home on land contract?” “What happens if we buy with a land contract and the owner defaults on the mortgage?”

This is only a sample of the questions we have been receiving at the Metropolitan Consolidated Association of Realtors. With tightening credit, there will continue to be creative approaches to financing real estate transactions. All real estate brokers and agents need to be extremely cautious regarding their involvement in any transactions involving some type of creative financing.

We do not need to repeat here the numerous problems affecting the mortgage market due to the “creative” approaches to financing that we saw through 2005. We do, however, need to be prepared to respond to the questions or concerns received from consumers that find themselves in a difficult situation.

To be in a position to respond to the inquiries, Realtors need to attend informational/training sessions dealing with real estate financing. Have a working knowledge of the options available to consumers and the benefits or drawbacks related to each. Short sales, foreclosures, lease with options, and rights of first refusal are all issues that are sure to come up in conversations with consumers on a daily basis.

With 2008 also being an election year, we can be sure that there will be much talk and posturing regarding the housing market. The ability to assist consumers through these markets could result in significant long-term benefits. A key to this also is a well-developed network including legal counsel and financial advisors.

Take the time to obtain the knowledge needed to work with buyers and sellers who we will be seeing for at least the next 18 months. The benefits in business, as well as risk management, will follow.

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