It is Time to Dwell on the Lessons to be Learnt from the Foreclosure Crisis

It is now time to dwell on the lessons to be learnt from the foreclosure crisis in order to avoid a rerun of it. It is like going back to the scene of crime and see what can be gained from the losses – gains in the form of lessons learnt.

Riverside also known as Inland Empire lying east of Los Angeles was the worst affected by the foreclosure crisis. It came from unregulated predatory lending of sub-prime loans that led to the housing boom prior to the housing bust. The crisis pushed America into the longest recession since the 30’s.

Melindia Opperman of Riverside’s branch of Springboard (non-profit counseling body) said, “Welcome to Ground Zero. This is where the canary died.” She was referring to the practice of a canary bird being used to test the presence of any toxic fumes in coal mines. The Riverside real estate market was definitely one of the most poisonous in the nation. It had the fastest growth during the boom and came to be followed by an equally ferocious reversal.

The cal of the hour is to plug the holes and bring back wealth to the consumers. For this banks have to be stricter in their internal systems and governance. The regulators with red faces have to now show that the can really protect the house owners and also supervise the lenders.

But so far the response to the housing crisis has been poor and the stability has yet to return that will bring back home of recovery in the near future. The actions taken by the government focusing on the corporate sector causes fare that the same conditions are now showing up that led previously to the housing crisis.

Some are saying that the crisis is drawing to a close but unemployment continues to increase and there is still a shadow inventory of bank repossessed homes that might any day hit the market and further pull down prices. Voices are being raised giving out warnings that no lessons seemed to have learnt. Those who are saying that the worst days are over are just being optimistic.

Peter Shiff of Euro Pacific Capital a brokerage firm that drew attention to itself for is accurate prediction of the crisis in 2004 said, “The same people who told us there was no crisis are the ones who are telling us it’s over. He is warning that real estate prices will soon be going for another tumble as the option ARM loans are starting to default.

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