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Economic News

See the Light..How to Revive the Economy

This country, although in a paper, no job recovery, needs some help to put us back to where people can smile.

Wall Street is in love with this type of environment.  Their stock prices are up, their sales are good and they can do it without dealing with employees, unions and lawyers as much as a full employment situation would deal.

But, I have ideas from my vantage point, the real estate world that will help us get back some of the jobs lost and spur the economy.

First, a bit of background:

The real estate industry is NOT the leader in an economy.  People don’t buy houses then get jobs (at least not anymore since the no doc loans are gone), it’s the other way around.

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But, the current foreclosure crisis has set up a situation where we can at least try the backwards route.

1. REBUILD

Take a home that has been foreclosed that is in need of work.  A typical buyer can’t buy it because it is a mess and Fannie Mae/Freddie Mac won’t give them a regular loan.  What if we were to get TARP-like money that would give the bank that owns the home the ability to hire local contractors who would buy from local suppliers the ability to fix up the house.

Then the local real estate agent could sell a finished home to someone at a market price so the bank (and the government) get paid more money money back (and less for the tax payers to absorb therefore lowering the budget deficit) and the TARP-like funds get paid back with interest.

The federal, state and local economies get tax money and the local businesses get people buying stuff!

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2. RIGHT REFI

Take a person that has a great credit score with great income that is paying 6.5% on a mortgage that can’t refi because the value of the property is underwater.

Why not let this person refinance WITHOUT and appraisal so that they can save $250 per month.

Do you know where the $250 will go?  Back into the economy.  DUH!!  Multiply $250 by the thousands of people in that situation and that adds up to a lot of future tax dollars to pay down debt, spur job growth and create happiness!

3. HVCC to be Really Repealed

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Stop ripping off the consumer for an appraisal that used to cost $300 and now costs $500 because a new age middle-man called an AMC has appeared thanks to Andrew Cuomo and Representative Paul Kanjorski of PA.

Now that mortgage originators are licensed under the NMLS, the scum is disappearing every day and the adults are back in charge.

The bad, fraudulent appraisals that are being done on the cheap are raising people’s interest rates and making a mockery out of a proud profession.

4. CONSOLIDATE:

Fannie, Freddie, FHA, VA and USDA should be one agency, have each mortgage guaranteed by a small insurance premium on each loan.

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5. GFE SANITY

Get rid of the stupid Good Faith Estimate and replace it with the HUD-1.  DUH!

Just a start, but until we get common sense back in the real estate world, the general economy will continue to suffer.

If this all fails…pray!

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Written By

Realty Reality! That describes Fred, a sharp witted and outspoken realist for the mortgage and real estate world who has appeared on CNBC and NPR's Marketplace along with being quoted in the New York Times, The Wall Street Journal and other media outlets. Fred is the CEO of U S Spaces, Inc/Arrivva (a real estate brokerage firm in PA, NJ, DE and CA) and U S Loans Mortgage Inc (mortgage brokerage in PA, CA, FL and VA), and serves on the Board of Directors and is the Federal Legislative Director for the UpFront Mortgage Brokers. Fred is also the co-creator of real estate startup Rentscoper.com, a mathematically driven rental search engine. See everything Fred at fredglick.com.

14 Comments

14 Comments

  1. Sam in Austin

    September 23, 2010 at 4:06 pm

    HVCC absolutely needs to go and I agree about the HUD 1 as well.

  2. Dan Connolly

    September 24, 2010 at 6:07 pm

    6. Remove the assinine rules that govern financing condos. Remove the stip that there has to be less than 25% owners or that no more than 10% can be commercial and let some of these sell to normal homebuyers with Fannie, Freddy and FHA.

    For awhile they wouldn’t issue permits around here to build high rise condos unless there was commercial on the ground floors, mixed use. Then Fannie Mae and Freddie Mac decided commercial was bad and now we have highrises sitting empty, foreclosures and bankruptcies all over the place, and foreign investors picking up the pieces.

  3. Alex Cortez

    September 24, 2010 at 9:54 pm

    In relation to #1, most banks have been lacking when it comes to having the admin/logistics in place to handle short sales and foreclosures, so I don’t see how we could expect them to have the type of infrastructure necessary to carry #1 out. Good in theory, just not practical.

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