As 2008 comes to a close its easy to look back and say that we’ve undergone a significant amount of economic change.  Change is constant and will never come to a halt, but 2008 has brought forth more changes in our economy than we’ve seen in a couple of decades.  The changes we’ve seen in the last decade have lead to the change we’ve seen this year.  I could talk for days about the lackadaisical lending patterns that lead to our current economic state, but we’ve all heard enough of that in recent months.  The emphasis now needs to be about education on how to move forward.

The education needed in today’s society has to start as a foundation for our youth.  I believe strongly that financial education should be established prior students graduating from high school.  The current lack of financial education has led to our dismal state of consumers with literally no sense of financial responsibility.

As I’ve said in recent posts it’s important to be educated about credit, budgeting, and financing.  In regards to mortgages, it is especially important to be educated about the needs to obtain credit and the responsibility of managing the privilege of home ownership.

Please stay tuned in the next few weeks for some great tips and tools for financial education as we enter the new year!

Have a safe and fun New Year!

The daily media focus on the economy has brought the “banking crisis” to the forefront of everybody’s mind.  The failure of several large players in the banking system including 158 year old Lehman Brothers and the largest savings and loan bank Washington Mutual, has undoubtedly proven struggles in our banking system.  The congressional decision to pass the bailout plan will provide the much needed relief to the banks with a manageable recovery in sight.

Being in the midst of the daily information overload as a mortgage professional, I enjoy coming home with the family and turning on the evening news to see how the media will portray the day’s events.  Lately, I have been more than disappointed with the news of the banking system.  As banks fail or are aided by the government, the media provides the message that credit has completely “dried up” for American consumers.  The reality in the lending system now is that there are still loans available.

What we fail to hear is that Americans became used to a banking/lending system that was unconventional and much too lenient.  The performance of these banks was more important than education for those who lend and those who borrow.  This lending system has lead to an unusual amount of defaults in nearly all areas of banking.  The result has been a shift in lending practices.  There are still loans available for any need American consumers may have, but we have reverted to normal qualification standards.

We hear that bank loans have “dried up” or that there is no longer any loans available for consumers.  These claims are extremely vague and rarely come with any facts.  Please know that we are in a transition period to return to normal lending standards and there is still money available to borrow.  Below are some numbers from the Federal Reserve Board’s weekly report.  Note that consumer loans were up 9.5% from August 2007 to August 2008.

The need for education about credit, lending, and overall financial planning should accompany every credit decision.

If you have questions about how the transition period will affect you please comment or email to Conrad Venti.

U.S. Bank Loans (Billions of Dollars)

Federal Reserve Board, “Asset and Liabilities of Commercial Banks in the United States” (H.8)