These are precarious times in our country's history. As I reflect on the past year and the coming year, politics have taken the drivers seat to what is happening in our industry. I believe we are on the cusp of a paradigm shift that will forever change how we conduct our Real Estate transactions. Our business as Realtors is at stake. The banking lobby is much stronger than other lobby's including NAR and NAMB. Dodd Frank and the SAFE ACT were supported by big banking interests. Any one of the facts below on it's own may not mean much at face value, however observing these industry trends in their entirety what is your conclusion? What is the trend we are on? What is our industry going to look like in coming years?
I would like to throw out some ideas and trends that I see happening and hope that some of you professionals out there are as concerned as I am.
THE NUMBERS
1. The number of homes 30 or more days delinquent (or in foreclosure): 7,000,000.
2. This figure does not count for HELOC's charged off and still owed by consumers unsecured or secured.
3. There have been 4,000,000 homes foreclosed on since 2006.
4. A third of all borrowers do not qualify for a loan.
5. Home-ownership once seen as the American dream has been co-opted by the politics of the day.
THE POLITICS
6. Our politicians are looking for as many ways as possible to tax us. Home interest deductions will be on the table.
7. The $250,000-$500,000 capital gain exemption on personal residence will be on the table.
8. Local states, city's, counties, and utilities are raising taxes and fees to keep their employees working and unfunded retirement plans in place. Real Estate is the target.
9. If our banks came clean on the true value of the loans on their books, they would be insolvent, mark to market has been suspended by the politicians. How many loans are they really willing to make?
10. FNMA & FHMLC are forced to take the worst loans of insolvent banks and are being used by the government as the grave yard of bad loans. And we are bailing out the GSE's as tax payers.
11. Mortgage insurance premium fees for FHA continue to go up and soon a buyer will need 10% on a 3.5% down payment FHA Loan.
12. Hedge funds and large politically connected investors are going to be chosen to buy the shadow REO inventory of FNMA and FHMLC. They will be required to rent the inventory out so it will not flood the resale market, thus flooding the rental market.
13. We are now bailing out Europe QE3 and inflation is around the corner.
DODD FRANK
14. The politicians are pushing for $20% minimum down payment in the QRM (qualified residential mortgage) rule under Dodd Frank.
15. Dodd Frank absolutely forbids AITD's and Wrap around mortgages.
16. Dodd Frank in seller financed loans requires the seller to amortize the loan with no balloon and the loan must be fixed for the first 5 years, or hire a MLO Mortgage Loan Originator to underwrite the loan.
17. Dodd Frank will be fully implemented in 13 months (January 2013) and is for consumer finance what Obama care is for health care.
SAFE ACT
18. Under the SAFE Act. Mortgage Loan Originators are required to pass State and Federal tests to become loan officers for mortgage bankers. Bank loan officers are not.
19. Mortgage broker MLO's are required to take 8 hours of continuing education and pay around $800 in fees every year. Bank loan officers are not.
20. Dodd Frank and the SAFE Act written by the banking lobby, has effectively eliminated much of the competition for lending and mortgage banking. This will lead to higher origination fees.
Well now I am totally depressed at writing my own blog. Let me know what your ideas are on solving our problems.
Respectfully,
Terry Lewis
Notebuilders, Inc.
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