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The Politics Of Housing Recovery

By Jeff R. Geoghan

Real Estate Agent with Coldwell Banker Realty

October 19, 2011 07:47 AM

It seems that while everybody is putting forward ideas for a plan to “fix housing,” not much is being done. Considering that several proposals have come from the Republican side of the aisle, it shouldn’t be considered an election-year football.

The latest, presented as a congressional bill Oct. 5 by Sen. Johnny Isakson and Rep. Tom Graves, would create a waiver for the IRS penalty for withdrawing 401(k) savings to pay down delinquent loan amounts in a pending foreclosure. As with all the other plans or ideas put forward in the last two years, this one has its positives and negatives. My fear, however, is that nothing will get done — or even tried — in this tense pre-election atmosphere.

The real losers? All those who legitimately could use a hand and are about to lose their homes.

I am emphatically not a big-government supporter, but I would also contend that since big-government policies caused the housing bubble and placed the housing market where it is today, government needs to craft a policy that would:

Reduce the number of homeowners about to enter foreclosure.
Motivate banks holding foreclosed properties to get them sold.
Create a stable lending environment for mortgage lenders to go out and make good loans on currently distressed properties (most of which currently don’t qualify for FHA or VA loans based on condition).

I’m not necessarily advocating a nationwide “one-size-fits-all” federal policy package — I’d be fine with the FHA putting together liberal guidelines making it easier to get a loan on a distressed property (underwritten second loans, less-restrictive property appraisals …) and handing the states something they can work with.

The bottom-line problem at the moment is that there are untold thousands of properties sitting vacant falling into disrepair around the country with no light at the end of the tunnel for them. I bet you even know of one somewhere near you. All the while it’s harder and harder to get a good home loan, especially if you are one of those folks interested in taking on a distressed property to rehabilitate it. On top of all this, mortgage lenders face stiffening compliance regulations and rising fees to write loans.

If anything ever was a bipartisan problem, the housing mess is. Let’s all share with our elected officials that we’d like to see politics set aside and solutions tried.

Jeff Geoghan is a real estate agent and founder of www.yourlancasterhome.com in Lancaster County. He also hosts “YourLancasterHomeTV (tv.yourlancasterhome.com).” He also holds a Green designation from the National Association of Realtors and blogs about homes and green issues.

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Carol Babington

Carol Babington Associates - Las Cruces, NM

CRB, CRS, CIPS

Your second idea, "motivate banks holding foreclosures to get them sold" is an interesting comment. It's true the bank has no use for the property. So, what are the banks doing with these homes? In some cases, the homes are donated to non-profits. In other cases, the homes which are worth less than $10K are being bulldozed. In some cases, they are being blown up...

If you'd like to read what the banks are doing with these properties, go to:

http://www.bloomberg.com/news/2011-07-27/bank-of-america-donates-then-demolishes-houses-to-get-rid-of-foreclosures.html

Oct 19, 2011 08:03 AM

Daniel J. Brudnok, REALTOR

Berkshire Hathaway Home Services Fox & Roach, REALTORS - Exton - PA License #RS-225179-L / Delaware License #RS-0025038 - Downingtown, PA

SRES, e-PRO,ABR,GREEN,CSP

Jeff,

I agree that heading into an election any possible solution will be held onto for the party until they get the office....bad for the consumer needing help now.

I agree w/the appraisal issue, but it goes much deeper in that the Lenders are telling the Government, ...thanks for the bail-out NOW get out of our business.....UGH. Until that happens or they come to some agreement it will stay the same which is unfortunate for all Buyer's, Seller's and us as well.

Oct 19, 2011 08:11 AM

Gail Robinson

William Raveis Real Estate - Southport, CT

CRS, GRI, e-PRO Fairfield County, CT

Jeff - No one should spend retirement funds on preventing foreclosure. That's ridiculous. The lenders should write down the principal balance of all homeowners who bought at the peak of the market. They'll hever see those values again and are trapped in their homes. Let's do the loan modifications, write down the principal, and stop the foreclosures!

Oct 19, 2011 04:05 PM

Jeff R. Geoghan

Coldwell Banker Realty - Lancaster, PA

REALTOR, Marketing Manager

Thanks for the comments!

Oct 20, 2011 05:40 AM

Craig Chapman

Call Realty / Access Appraisals - Mesa, AZ

The Value Guy

There are tons of potential buyers out there who are being held out of buying at these new lower prices due to prior short sales or foreclosures. If a person had good credit in most things except their lost home, due to lost employment or ?, it would seem a huge boost to the real estate market & the economy to get these people back into a buying situation in say 6 - 12 months instead of making them wait 3 - 7 years in many cases. If a person 1 year from loosing their home has good income to buy an affordable home with a lower payment than current rent, it would help the market with another home off the banks list & the buyer would have more money to pump into the economy. Multiply that by several hundred thousand & it would make a difference.

Oct 25, 2011 08:51 AM

The Politics Of Housing Recovery

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