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Just how badly do we need a bailout to happen?
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I guess it's natural for Congress to turn the proposed federal mortgage bailout into a political football, but there shouldn't be any debate on how badly a bailout is needed.
After talking to several colleagues in the Tampa Bay real estate industry over the weekend for the latest, it seems clear that the mortgage business is practically shut down as everyone waits to see what happens next.
As one friend put it, "If you have a 600 credit score and want to put 20% down, you can get something going. But good luck if you don't have that going for you."
The problem is simple. As a lender, how can you value a property if the value keeps falling every month? And if you can't value a property, how in the world can you have any confidence about what you'll get back if the mortgage holder defaults?
Mortgage providers have every reason to be freaked out. It seems that in Florida at least, any stigma associated with letting your house go into foreclosure is gone. A friend told me last week how a wealthy acquaintance was bragging to his friends about how he "just let my Florida house go." No big deal. I guess the thinking goes that if you aren't thinking of buying any property any time soon, what does it really matter?
With all this madness grinding the mortgage business practically to a halt, it's clear that something dramatic has to happen to change the equation.
Let's just hope Congress gets the memo and takes some action. Certainly, oversight is needed for a bailout to work correctly, but what can't happen is inaction. The result of that would be far worse than what happened today on Wall Street.
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