The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Peter V who wrote (123691)	5/17/2008 6:03:09 PM
From: Jim McMannis	Read Replies (1) of 306849

Leadership lessons from the mortgage mess business.inquirer.net DRIVE through the typical American neighborhood these days, and you will see disturbing signs of the housing collapse. Whether advertising homes for sale or foreclosures, these signs stand as evidence of leadership failures in the mortgage market. What happened to create the mortgage mess? What leadership lessons can be drawn from the situation? The (former) homeowner Although the housing decline has been fueled by a variety of complex factors, the mortgage mess was predicated upon a basic human vice—greed. No segment of the industry has been exempt from greed, and the behaviors of homebuyers, mortgage brokers and investment bankers alike have contributed to the crisis. Homebuyers yielded to the great American temptation of living beyond their means. Many undertook obscene amounts of debt to finance homes that their income could not support in the long run. Lacking the discipline to save for a down payment, they recklessly entered into interest-only loans or adjustable rate mortgages. As long as the home value increased, they stayed afloat. However, when home prices plunged downward, these buyers found themselves living in homes worth less than the money they owed for them. The lesson: Patience Walk before you run. Get rid of consumer debt before making major purchases. Build savings before you build a home.

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