Why Did the Housing Market Crash?
Meet Greg Palmer
I recently learned that one of our readers is in the mortgage business. Specifically, he buys up bad mortgages (No, that’s not him in the picture). I joked that such a job must be similar to that of an undertaker during the bubonic plague considering the current housing crisis in the U.S. An interesting discussion ensued and with his permission I’m going to share that conversation with you. It’s nice to know that I have such experts in my readership.
Greg Palmer (GPalmer) is President & CFO of Dreambuilder Investments LLC, a private mortgage investment company which specializes in the acquisition, management and liquidation of defaulted residential mortgages nationwide. He has a B.A. in Philosophy from Union College and an M.B.A. from Northeastern.
RHM: Are the horror stories real? Are people being thrown out of their homes in droves or is it a small percentage of overall home owners who are in trouble?
GPalmer: The horror stories are real, but not nearly as widespread as the media would have you believe. It’s bad… but, it’s not every other house on your street. To put some numbers to it the Mortgage Banker’s Association reported that for Q2 2008 the delinquency rate was 6.41% (loans at least one payment late, but not loans in foreclosure), 2.75% of all loans were in the process of foreclosure, and foreclosure starts were 1.08%…. all records. When you start looking at loan types, classes, states etc. there are some glaring issues.
RHM: You mentioned that you work directly with home owners. Do you seek out those who are in trouble or do they typically find you?
GPalmer: We seek them out. Typically, we’ll buy an entire pool of loans from a bank, then systematically work through them seeking out homeowners to work out a solution. Those that are cooperative and responsible, we bend over backwards to help.
RHM: How about a prediction: will home values stabilize or continue to plummet?
GPalmer: I see home values continuing to drop for another 12-18 mos. Based on everything I’ve read, and our company’s real life experience, there aren’t enough buyers in the market that can get financing. Credit is super tight, people who are in a home are likely upside down and can’t get out, so you’re left with first time homebuyers, investors, and the rare bird that hasn’t tapped the equity in their homes during the boom and has a very low, or no mortgage. So, properties aren’t selling, and we’re adding to the inventory every month… so, prices will continue to drop.
RHM: Is some ways isn’t this crisis a much needed market correction for home values and too-good-to-be-true credit?
GPalmer: Absolutely. The two are inextricably linked. Values soared because of loose lending standards and lack of accountability in how the mortgage business works. The over extension of credit allowed more people to qualify for more and more expensive homes. Artificially induced demand drove up prices based on bad lending practices.
RHM: “Dreambuilder Investments, LLC is a mortgage resolution and investment company bringing liquidity, efficiency and humanity to distressed markets.” Liquidity and efficiency are self-explanatory concepts in the business world. What about “humanity?” Can you give us a glimpse into why Dreambuilder sees its role as humanitarian?
GPalmer: Humanity in that we treat every homeowner with decency and respect. We don’t treat them as raw materials to be turned into a final product. We are flexible and empathetic to their circumstances and we offer alternatives to them otherwise unavailable. It’s not just making money.. but, how we make it and the impact we can have on the lives of the people we deal with….
It’s no bullshit… it’s how we work, and it just also happens to be the right business objective.
Thanks, Greg.
About the Author: Randall H. Miller is an American college educator/blogger. He is also a former U.S. Army officer (82nd Airborne) with a M.A. in Diplomacy (focusing on International Terrorism) and a B.A. in Criminal Justice. Use the form on the right to sign up and receive notifications of new content. The words and ideas expressed here are 100% his own and not those of his employers or affiliated organizations.
Starburst | Oct 31, 2008 | Reply
Interesting perspective and I’ve no doubt Mr. Palmer is doing great things. However, I cannot help but wonder why someone with his credentials wouldn’t prefer to work on the other side of the mortgage industry and help people qualify and obtain good, solid, ethical lones in the first place.
*Starburst*
RHM | Oct 31, 2008 | Reply
@ Starburst
It sounds like Greg and his company are keeping people in their houses who may otherwise end up out on the street. And if they can make a profit at the same time I’m all for it.
LaPaix | Oct 31, 2008 | Reply
This guy sounds like a very decent human being. I wish him much success!
GPalmer | Nov 3, 2008 | Reply
@Starburst…. 2 reasons… 1) when I started doing this 4 yrs ago, it was a different landscape… 2) there’s no money in it.