As foreclosures begin to mount over the next year or so in the wake of the subprime debacle, Clint Conger, a loan officer at MidAmerica Bank, has a few ideas about how to prevent the situation from recurring.
“You can limit the number of investors that come into neighborhoods. You’d be surprised at how many of these foreclosures are investor-owned,” he said. Too many lenders, he added, were using low rates to entice investors and others with good credit to assume more debt, then “subsidizing those low rates with the subprime stuff, and loans that shouldn’t have been made.”
It’s more important than ever that buyers are not only smart about how much they can afford, says Conger, but about making sure they don’t overpay for a property.
“I think a lot of sellers are obviously trying to get out of debt, and that’s why they are selling. So I think new buyers need to be much more aggressive. Start putting in bids at 20-30%[below the asking price], and really look at whether they’re getting a good value. Are they helping someone out by taking on their debt, or are they preparing for their future by getting in at the right price, getting themselves a comfortable payment, considering their income and the potential appreciation of that property?”