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Congress & Obama Clueless About How to Fix the Housing Crisis

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Too many chiefs?

cluelessWith the housing crisis still heated and stabilization seemingly wishful thinking, 2010 will continue to be the year of finger pointing and as proof, everyone seems to have an idea that they feel will fix the housing sector. All ideas seem to be aimed directly in Fannie Mae and Freddie Mac’s direction.

FHFA has set new goals to overhaul Fannie Mae & Freddie Mac, Barney Frank has called to abolish Fannie Mae and Freddie Mac altogether, the National Association of Realtors recommends that Fannie & Freddie be converted into “government-chartered, non-profit secondary mortgage market authorities,” Credit Suisse is calling for them to be privatized while Former Treasury Secretary Henry Paulson suggests they should be set up as public utilities.

Pipe down, everyone

The Obama administration confirmed this week that it will not entertain any legislation regarding Fannie Mae or Freddie Mac until next year which we suspected would be the case, given that housing has not been a priority of the administration (as shown in his State of the Union speech which devoted 3 lines in the entire 70 minutes to the housing crisis).

Congress has no idea or consensus on what could actually help the housing industry and the White House seems to be following that same sentiment. Abolish? Overhaul? Privatize? Since The Hill doesn’t intend on doing anything, we unfortunately have ample time to debate this- what do you think would make the most impact in fixing the housing crisis?

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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25 Comments

25 Comments

  1. Real Estate Feeds

    February 26, 2010 at 5:11 am

    Congress & Obama Clueless About How to Fix the Housing Crisis: Too many chiefs?
    With the housing crisis still heat… https://bit.ly/9LoCaB

  2. Real Estate Ninja

    February 26, 2010 at 5:13 am

    Congress & Obama Clueless About How to Fix the Housing Crisis https://bit.ly/9vtUcc

  3. realdiggity

    February 26, 2010 at 5:23 am

    Congress & Obama Clueless About How to Fix the Housing Crisis: comments https://bit.ly/dlMGyB

  4. RealEstate Babble

    February 26, 2010 at 5:24 am

    AgentGenius: Congress & Obama Clueless About How to Fix the Housing Crisis https://bit.ly/cMW5dq Full https://bit.ly/caTN4b

  5. Eric Hempler

    February 26, 2010 at 6:40 am

    I think they need to let housing work itself out. I really don’t understand why they thought a tax credit would get people to buy. How can people buy if there are no jobs? Then there’s a credit if you sell then buy another home. Why would ANYONE sell their home and buy another just to get a tax credit? Aren’t you actually losing money with the closing costs and down payment? How is that a beneficial thing to do? The reason housing is having this major correct is because of the Community Reinvestment Act changes, so why would we want the government to mess things up more?

  6. Matt Stigliano

    February 26, 2010 at 7:33 am

    Lani – I think we need to let pricing work itself out more than anything. Will that destroy some people’s hopes and dreams on their home if they’re underwater? Of course. Unfortunately, not everyone’s home price can be resolved with a snap of the fingers.

    The tax credit needs to go – artificial demand and confusion/anticipation have ruled this part of the housing market corrections. Stop telling people it’s the last one and then sending out press releases that encourage it to be extended (I’m talking to you NAR). Encouraging the continuation of the tax credit will only further deepen the psychological long-term impact of the crisis.

    Let’s stop paying lip service to homeowners. Want to keep them in their houses – then do it. Want to make the short sale/foreclosure process easier – then do it. Want to get banks to stop this “we’ll get to it when we get to it” attitude – then do it. I’ve listened to so much talk about these things, yet the banks seem to have the government fooled into thinking they’re doing the best they can. I don’t buy it.

    My favorite example is short sales…”we just don’t have enough people to process all the short sale paperwork.” Hmmm, you’ve just brought in a nice profit, you borrowed money from the U.S. to get you on your feet, we have high unemployment, you claim to care about customer service, and your department is understaffed. *Scratches head* Hmmm, I know there’s a solution in there somewhere…I just can’t figure it out.

  7. Ralph Bell

    February 26, 2010 at 9:45 am

    The tax credit is really helping those in the lower price range of home shoppers. The 8K definitely makes a difference to them. They are purchasing Foreclosures and short sales in need of repair or updating and using the 8K to replace carpet, flooring, and paint. Think about all the economics involved with that.

    But as far as the middle to upper end home buyers I see that the 8K is not persuading them to purchase now. It is not creating a since of urgency like it is for the lower end home buyers.

    I would like to see the Feds allow a permanent tax credit for 1st time home buyers looking to purchase distressed properties and increase the amount to 10K.

    • Eric Hempler

      February 26, 2010 at 10:18 am

      If you put a permanent tax credit for first time home buyers you’re making a false market and it would be only a matter of time till these homes are overpriced.

    • Dennis C Smith

      February 27, 2010 at 1:44 pm

      They are able to get their tax credit fast enough to do all that work? I am very skeptical any tax credits have been processed that fast. The tax credit is a waste of tax payer money and those who have benefited the most are those who have frauded the system to pick up the check. Get rid of it.

  8. Ralph Bell

    February 26, 2010 at 10:46 am

    A false market for distressed homes? Now that is funny!

  9. Nashville Grant

    February 26, 2010 at 1:27 pm

    How about hands off and let the natural market forces determine the housing market!! That is a true free trade democratic capital market.

  10. ShortWoman

    February 26, 2010 at 5:28 pm

    Well, when the unfortunately accurately named TARP program was unveiled, I thought it would have been a far better idea to for the Feds to simply pay a maximum of $100,000 towards every primary mortgage. This would have the same net effect of giving money to the banks with no strings attached (which is pretty much what happened) while making most homes no longer “underwater,” thus drastically reducing the number of short sales and foreclosures. But no, we can’t leave the impression that the government will bail anybody out who’s worth under a few million dollars.

    As for what will help now? We have got to get all these contingent short sales moved before they all become next month’s or next year’s REOs. Almost 2/3 of Vegas’s contingent listings are short sales awaiting approval! That’s over 9800 properties, and we only have 11,000 available listings.The banks are quite stubborn about approving these things, and the new voluntary guidelines are a joke. I hate to think that we might need a federal agency to rubber stamp the majority of them, but I don’t see the banks doing anything close to “the right thing.”

  11. Realty Infusion

    February 26, 2010 at 10:47 pm

    Lani Rosales nails the best read of the day ==> https://bit.ly/b7XgXA via @AgentGenius

  12. Greg Hollander

    February 27, 2010 at 2:34 am

    @agentgenius Congress & Obama Clueless About How to Fix the Housing Crisis https://bit.ly/aLOMEM

  13. Jim Gatos

    February 27, 2010 at 4:56 pm

    I don’t think the tax credit has TRULY motivated the amount of buyers everyone was hoping for and on the next roll around I think it should be put to rest.

  14. Brandie Young

    February 28, 2010 at 2:10 pm

    Hi Lani
    How timely. I just returned from the MBA Servicing conference – what an eye-opener! I participated in meetings with players from the “other side of the fence” if you will, including servicers, sub servicers , loss mitigation folks and GSE’s – very insightful.

    The bottom line is, we have a long way to go and will be feeling pain for some time.

    @Eric Hempler – spot on! People can’t buy or keep homes when they have no income.

  15. archer214AV

    March 1, 2010 at 8:11 pm

    There is a proposal that has been reviewed by many experts that is unlike any of the other “fixes”. It doesn’t include banks, it doesn’t require the existing mortgage to be modified, and it use market forces to quickly determine if a defaulted, distressed, or underwater mortgage on a home can be “fixed”. The program description and details are available at internetlawny.com.

    What if it works and is never tried?

  16. Burt Goralnick

    April 2, 2010 at 6:44 pm

    The Fix 1 2 3…

    1. Lower Income Taxe Rates = Incentive to invest.
    2. End Estate Tax (Or have a $10 million exemption= Save small businesses = Jobs.
    3. Regulate Oil Futures. All purchases must take delivery. = Less speculation, lowers prices.

    Last: Sell or refinance defaulted homes at market values with fixed fully amortized loans.
    (The government (Fannie & Freddi) suckered low income earners to buy homes on terms they could never repay.)

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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gas tax

gas-tax

Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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