Barack Obama’s President – Now What?

By Larry Genkin, RealEstateThoughtLeadership.com

A recent survey of NewsGeni.us readers had 10% of respondents listing “Barack Obama” top three concerns in the real estate industry. This was behind “foreclosures” but it was ahead of terms like “mortgage rates” and “tight credit.”

Let's examine what an Obama presidency is likely to mean for the real estate industry, so we can better determine the best course of action to take for a Realtor™.

Based on Obama's written policies from his website - www.barackobama.com/   -There are five (5) outcomes that appear fairly certain. They are:

#1 - Fewer and Less Swift Foreclosures. Obama believes that the real victims of the subprime mortgage mess are the homeowners. He feels they were mislead into taking out mortgages, far beyond what they could afford. To fight this perceived wrong, expect the government to be there to protect, and potentially, bail out homeowners. Previously he had introduced legislation that provided counseling to homeowners and tenants to avoid foreclosures and increased the ability of borrowers with risky mortgages to protect themselves in foreclosure proceedings.

#2 - Crackdown on Mortgage Industry. Nearly two years ago Obama introduced legislation to fight mortgage fraud and protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity. Long story short, this will likely mean tighter credit, with home buyers qualify for smaller mortgage amounts than in the past.

#3 - Tax Relief to Lower Income Home Buyers & Owners. Obama has pledged a 10 percent universal mortgage credit that gives tax relief to Americans who have a home mortgage. The Obama-Biden proposal will provide 10 million homeowners, most of whom earn under $50,000 per year, with an average of $500 in savings. This tax cut will provide direct relief to many homeowners who are struggling to maintain their mortgage payments. This will be a helping hand, but no game changer, for low income families.

#4 - More Accurate Loan Disclosures. As president, Barack Obama has said he will work to enact laws to ensure that all prospective homebuyers have access to accurate and complete information about their mortgage options. Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow Americans to easily compare various mortgage products and understand the full cost of the loan. The HOME score would also help borrowers understand their long-term obligations and would be required to include mandatory taxes and insurance.

#5 - More Renegotiated Loan Terms. Investors who own multiple homes and people with vacation homes can renegotiate those mortgages in bankruptcy. However, current Chapter 13 law requires ordinary families to stick with the original terms of their home loans—regardless of whether the loan was predatory or unfair. Obama has stated he will repeal this provision so that ordinary families do not suffer this unfair treatment.

What does all this mean?

From a macro perspective in the near term the biggest consequence is going to be tighter credit. This will mean fewer eligible homebuyers, who will each be able to afford less house. This will likely keep home prices down even though mortgage rates continue to stay low.

On a micro level, down to the individual agent, it means there will be fewer deals to go around. However, if you’re a serious real estate professional, don’t panic. This will not be as terrible as you might think, because there is a quick“ thinning of the herd” going on with Realtors™.

Over the last year we’ve seen many agents leave the industry on account of the downturn. And, our research indicates many others will be leaving soon, as they’re having trouble paying their own mortgages and bills.

Most of these agents who are leaving are “cream skimmers,” the people who were able to make money when the market was overheated, but weren’t serious enough about the business to develop the skills that would make them the “top of mind agent” in their market over time. Even in this down cycle, “Top of Mind” agents are and will continue to do very nicely financially.

About The Author

Larry Genkin is the author of the upcoming book “Thought Leadership Marketing” and the creator of the Real Estate Thought Leadership Marketing Mastery Program – www.realestatethoughtleadership.com, where he teaches Realtors™ how to become the “Top of Mind” agent in their market. He can be reached at Larry@realestatethoughtleadership.com.