From HW (If the candidates need help, see JtR answers in italics):
President Obama and GOP challenger Mitt Romney should start talking about their housing policy intentions, experts in the industry said.
A group of associations, nonprofits and think tanks made speeches and conducted a panel discussion in Washington, D.C., Wednesday to elevate the housing debate onto the national stage. They challenged political candidates to address the still ailing housing market as the presidential campaign shifts into high gear.
Both presidential candidates have been mostly silent on housing policy aside from Obama’s push to allow more homeowners to refinance and Romney’s comments early on the campaign trail to let the foreclosure process run its course.
Neither campaign, to date, has released substantive housing policy proposals.
“We are entering a critical phase of the presidential campaign,” said David Abromowitz, a senior fellow at the Center for American Progress. CAP and the National Council of La Raza, among others, sponsored the event.
In conjunction with the event, CAP released a set of seven housing questions it said it sent to each presidential candidate in a “Home for Good” campaign to bring more awareness to the still struggling housing market:
1. What will you do to prevent more unnecessary foreclosures and keep more families from losing their homes?
JtR: Foreclosures are only necessary if borrowers stop making their payments.
2. How will you address the problem of “underwater” mortgages?
JtR: What’s the problem? That people can’t move? We need to get used to having what we have. “Stick and Stay and It Will Pay.”
3. How will you revitalize communities already hit hard by the foreclosure crisis?
JtR: Investors are willing to buy at make-sense prices. Once we hit that floor in hard-hit areas, owner-occupiers should be interested in buying at those prices too. Keep FHA as the low-down alternative, and closely monitor their default reserves.
4. How will you meet the pressing need for affordable rental housing?
JtR: Sell more homes to investors? Encourage lease-options.
5. What will you do to assure that working and middle-class families can achieve homeownership in the future?
JtR: Keep FHA around, and promote lease-option plans to investors. Encourage multi-generational families to live together. Lobby NAR to do something productive.
6. What do you plan to do with the government-backed mortgage giants Fannie Mae and Freddie Mac, and what will take their place in the mortgage market of the future?
Don’t replace them, just quit subsidizing them.
7. How do you plan to protect households from predatory lending and discrimination in the U.S. mortgage market?
JtR: Make it a reality TV show where realtors and mortgage people are seen going to jail.
“We’ve caused extraordinary damage, my industry has,” said Mortgage Bankers Association President David Stevens, who spoke on a panel at the event. “The question is, How do we get hope back into the housing system?”
Stevens said he doesn’t want to create irrational exuberance over recent good news about home sales and house prices, but rather seeks balance in the housing market, including a balance between homeownership and renting.
“Clearly we had too many people promoted into homeownership and it disparaged and destroyed communities,” he said.
Homeownership needs to shift toward well-qualified borrowers with fully documented loans who can prove their ability to repay while balance on the renter side requires addressing a shortage of affordable rentals in key urban markets, Stevens said.
Like your answers, but… the correct answer to #5 is to stop artificially propping up prices. They should focus on making the houses inexpensive, not the loans.
Two problems:
1. Government won’t go for it.
2. Sellers won’t go for it.
As long as we have a muddle-through government, house prices will be propped up to support the banks.
It would take an all-out revolution to change it, don’t you think?
Common sense has no place in politics. It’s not the career for JtR.
A: Get people back to work so they can pay their bills.
The great tragedy is that the too often the people who promise a new government program to address every new issue are those who get elected.
I wish people would stop trying to come up with quick fix no pain solutions because they don’t exist. The bubble prices ain’t coming back anytime soon, can we just accept that and move on. The housing market went through the biggest bubble we’ll probably ever see and it’s going to take time to heal itself.
I personally think we should reduce leverage in housing so I’d like to see FHA go away or at least increase the down payment percentage to 10%. That wouldn’t be popular to people looking to sell at higher prices but it would stabilize the market over the long term.
Like it used to be: Min. 10% DP, 33% max loan pmt. to income, full doc approval. That worked pretty well. These tiny dp’s and 40% plus payments are terrible. The above plus the interest deduction and non-recourse loans = the government encouraging way too much speculation in housing. Way too much.
When are stated income loans going to be available with zero down again?
We don’t need them – there are more buyers than properties currently, with no change in sight.
“there are more buyers than properties currently, with no change in sight.”
A perfect time to require higher dp’s then.
I don’t mind higher down payments, buyers have to put down a lot more now than back in the peak era, and we’re hitting decent sales volumes.
The most interesting note of the month for me was that, in spite of losing money for the last 3-4 years, PMI companies are still willing to insure 95% and 97% LTVs. They are private for-profit companies, and somehow in their algorithms it comes out OK.
there could be another lending boom if Romney were to get rid of Dodd Frank regulation.
inventory shortage could be solved by banks releasing the shadow inventory.
Like it used to be:
ACTUALLY, it used to be 20% minimum on conforming loans up to only $200K or so, then 30+% for jumbos, and that’s with 28/40 qualifying plus the equivalent of 6 months payments in the bank. Oh, that was at average rates of over 8%, too.
Money isn’t as easy as it was during the bubble but it’s still far cheaper than it ever was.
It would take an all-out revolution to change it, don’t you think?
Not entirely out of the question.
housing prices are not propped up at least in my area it’s still cheaper to buy than it is to build.