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WSJ Reports Pres. Obama “punts” on Housing in State of the Union Speech

January 27, 2012  |  by John Heithaus

I’m sure I was not alone in hoping that the State of the Union speech featured some really solid plans and focus on the US housing market and the conundrum we’ve found ourselves in as real estate professionals. And while we’ve consistently reported stats that show the DC/Baltimore as one of the better markets in the US, we also know that all markets are hyper-local and, as a result, market activity can be uneven across the geography that MRIS covers. We also know that consumer confidence and the so-called “shadow” inventory of short sale to REO properties can and will have major impact on demand, prices and closings.

With this in mind, today’s news features an article by David Reilly of the Wall Street Journal. Reilly reports:

“So much for a grand housing plan. Going into the State of the Union, there were expectations President Obama could unveil sweeping initiatives related to foreclosures, mortgage refinancing or principal forgiveness. Instead there was a vague promise of legislation to enable ‘every responsible homeowner’ the chance to refinance at today’s low mortgage rates. Coming in an election year, that effort isn’t likely to amount to much. ‘Regardless of political appeal, housing support is not a Congressional priority for either side,’ FTN’s Jim Vogel said in a note Wednesday. ‘Priorities are taxes and jobs, and housing is too indirect.’

Full text of the article is here. WSJ subscription is required.

Clearly our leaders have decided to leave the housing market to its own devices. From my view and professional experience, calling housing “indirect” to the economy is not only inaccurate, but it shows a real disconnect with the economic factors and forces that really matter today.

If you were in President Obama’s position and made the speech, what would your initiatives be regarding housing?


Posted in Blog, Featured, Industry News, MRIS CMO Insights

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10 responses to “WSJ Reports Pres. Obama “punts” on Housing in State of the Union Speech”

  1. Karen Donaldson says:

    The President is very short sighted if he doesn't realize the importantc of houseownership in the US!

  2. I imagine I would attempt to resolve several issues rather than attempt to make one broad sweeping proposal. It would seem rather easy to regulate Federal backing for mortgages with the additional requirement that when standard underwriting is done, the potential maximum payment would be used when determining loan qualification. The next step would be to use the "bully pulpit" and get all lenders to agree to refi existing mortgage loans based on standard underwriting with the exception of an appraisal that covers 80% of the loan to value. The amount should be lowered to 70% with no cash out refi. this would be a payment modification of sorts that would allow people that can pay regular payments figured at market rate (4%) of the existing mortgage if refinanced. On those that can not pay, I would exercise what ever means is necessary to speed up the foreclosure process and get those homes emptied, marketed and resold. But then i am not the prez

  3. I really wish that the government (and mortgage companies) would look at a principle reduction plan with shared equity at the time of sale. I've been on too many listing appointments where the sellers are upside down, not destitute, but not solvent enough to pay off the loan. Strategic defaults should not be the preferred response to this situation.

  4. Sarah is so right. There have been so many talks in my office with top producers, lenders, and attorneys that all end with the same "best" idea that includes refinance with principal reduction and a shared equity at the time of sale. The people that did all the right things are ending up the same people that are the most punished. Unfortunately we have been having this discussion since the end of 2009. Now, in 2012, in my opinion, it seems like less and less of a good plan with the more years pass. If I were in the presidents shoes I would use words more than anything else. I wouldn't' have shipped off billions of the tax payers money to the banks, or gone on tv encouraging (incorrectly) more people to feel like they are in the right for not paying their mortgages. The banks are going to keep holding out and letting us take the bigger hits. The only light at the end of the tunnel is.. If you are in Real Estate now and not investing you are missing out….

  5. Karen Donaldson says:

    Sarah I listed a property Sunday where the Seller is in that situaton. She had surgery this past Summer literally so that she would not die & got 2 months behind. She hopes to catch up when she gets her income tax refund, but her property is still worth @$30,000 less than what she owes on it.

  6. MRIS_CMO says:

    Thanks to everyone for their comments! I read that the Romney campaign is looking at this issue very closely to come up with a solution and I do agree that we need to get to the bottom of the shadow inventory and deal with it as quickly and painlessly as possibly financially speaking. John

  7. Karen Donaldson says:

    Even though this is clearly a national problem who is to say that O'Malley couldn't come up with some kind of local way that Maryland could deal with it?? Many say that he thinks he is on his way to DC next.

  8. suzanne Valentin says:

    Never sure what will happen when when the election is over.

  9. karen donaldson says:

    One thing is sure…..interest rates will remain low until it's done!

  10. karen donaldson says:

    Obama needs to listen to experts in the housing industry.

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