Edward DeMarco under fire. Again. And again.
In the fall of 2011, Federal Housing Finance Agency (FHFA) Director, Edward DeMarco took heat for the Agency’s poor response to the housing crisis, for which House Democrats angrily called for his resignation.
When that didn’t happen, the group rallied last fall to insist that DeMarco “change course,” and implement a principal reduction program. DeMarco has been consistent in his position that reducing borrowers’ principal amounts would be “risky” and could cost taxpayers roughly $100 billion.
Tangling with the Obama administration
While DeMarco has been under fire for the direction of housing, President Obama has also been under scrutiny, but the truth is that DeMarco holds more power than Obama in housing, and in 2011, Former U.S. Secretary of the Treasury Tim Geithner and Obama tried to replace DeMarco, nominating North Carolina Banking Commissioner, Joseph A. Smith, Jr..
During confirmation hearings it came out that Smith was not confident he wouldn’t cave to pressure from the Obama administration and the nomination failed. The reason for the nomination? To put someone in the position that believed in principal reductions.
Now, Attorneys General are writing letters
Fast forward to this week, and the issue of principal reductions remains a hot button issue, with the Attorneys General of Massachusetts, California, Delaware, Illinois, Maryland, Nevada, Oregon, and Washington writing a letter to the President, opining that DeMarco’s refusal to forgive debt would impede the economic recovery.
The letter stated, “The FHFA’s refusal to allow for principal write-downs that would result in more loan modifications is a direct impediment to our economic recovery and stands in way of our efforts to provide much needed assistance to homeowners in New York and across the country. Under the leadership of Acting FHFA Director Edward DeMarco, Fannie Mae and Freddie Mac remain an obstacle to progress by refusing to adopt policies that will help maximize relief for struggling homeowners. The time has come for the President and Congress to work together to install a new, permanent leader at FHFA that will be a partner, not an impediment, in the national effort to comprehensively address the foreclosure crisis.”
Who would replace DeMarco anyway? Good question
So who would that replacement be? That is a tricky question, because while there are rumors that veteran Congressman and former member of the House Financial Services Committee, Mel Watt (D-NC) could be the next nominee, but with his strong position in favor of principal reduction, Senate Republicans, who have enough votes to block a nomination, would not likely be on board with any nominee who is being nominated for the purpose of forgiving debt.
Will the administration take a chance, or attempt to install someone more moderate, or move forward with DeMarco, despite House Democrats’ drum beat of opposition?
DeMarco proposes that Congress pick Door #1, #2, or #3
The irony of the outrage is that while DeMarco refuses to implement a debt forgiveness program on the millions of mortgages the Agency oversees, the Director testified this week, offering three proposals for the future of housing finance that would create the blueprints for the next generation of the Agency and create more sustainability in the sector.
DeMarco testified that sustainability would come from one of the following three options:
- “Standard-Setting” which DeMarco says would establish a “regulatory regime or market utility” to set industry standards, but remove the government guarantee so pricing credit risk would become the responsibility of investors.
- “Federal Backstop” calls on the feds only when the market is stressed or experiencing illiquidity. DeMarco proposed the backstop come from one or more sources, including the Federal Housing Administration, Ginnie Mae, the Federal Reserve, or the U.S. Treasury.
- “Government Guarantee” is much like the current structure which offers liquidity and favorable pricing but DeMarco says “would not provide the benefit of market pricing for credit risk of the underlying mortgages,” and would require “a significant amount of regulatory safety and soundness oversight to protect against the moral hazard associated with providing a government guarantee.”
DeMarco also testified that Congress is responsible for the future of housing, either ending the government’s oversight of Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac, or revise their charters, because Congress is who placed these entities under government conservatorship, therefore only they have the authority to alter that relationship.
“While FHFA is doing what it can to encourage private capital back into the marketplace, so long as there are two government-supported firms occupying this space, full private sector competition will be difficult, if not impossible, to achieve,” DeMarco concluded.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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