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The Republican Response to the Housing Crisis

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Services for Real Estate Pros with HomeFinder.com

 

 Former Massachusetts Gov. Mitt Romney  Former Arkansas Gov. Mike Huckabee  Arizona Sen. John McCain


I didn't forget the Republicans. As promised on Thursday, when I highlighted the top three Democratic presidential candidates' plans for bolstering the economy and housing market, I spent this morning combing through the campaign Web sites of front runners Mitt Romney, John McCain and Mike Huckabee to get an overview of their positions. As I mentioned in my Thursday blog, the economy and the housing crisis will be the biggest challenge the next elected president will face heading into office. While candidates from both sides of the political divide have laid out elaborate plans on immigration reform and the war in Iraq, voters have heard very little about their plans to stave off a recession and reinvigorate the slumping housing market.

No formal housing plans                                                                   

Former venture capitalist and former Massachusetts governor Mitt Romney used his business background and performance as a trouble-shooter at the 2002 Salt Lake City Winter Olympics to sway voters in his native state to defeat John McCain in Tuesday's Michigan primary.

Following his victory, Romney revamped his message of economic renewal for the national stage: "The key is to be able to rebuild the economy.... I would say it's in a fragile state and needs a steady hand at the tiller," the multimillionaire told CNN, when asked about the "state of America."

While Romney focused his rallies around the Motor City's troubled auto industry, there was little talk about his plans to reduce the state's growing foreclosure rates. According to RealtyTrac, an online marketer of foreclosure properties, Michigan is among the top four states with the highest rates of foreclosures.

Romney has said in numerous news reports that "the number one priority to head off a recession should be to stop the housing crisis." So what's his solution? Well, I'm not quite sure. If you go to the Romney campaign site, among the 11 issues ranging from immigration to the war in Iraq, there is no mention of the housing crisis under his "Global Economic Competition" plan. There was one sentence on the site: "At home, America faces the challenge of continuing to educate the workers of the future while dealing with a housing crisis and credit crunch."

His fellow candidates wish he would just go away, but Republican underdog Mike Huckabee is like wet mud on a campaign trail, and his message appears to be sticking with voters. The former Arkansas governor tackles 19 different issues on his Web site, but does not touch on any key housing problems facing the economy. Huckabee's proposal for a "fair tax" plan takes up a good 1,213 words under his tax and economy category.

"We have to scrap a 20th century tax system that is holding us back and keeping us down in the 21st century. The fair tax is the path to greater prosperity and job security for us and for our children," Huckabee writes.

Other than theoretically putting more money back in consumers' wallets, I don't know how a fair tax plan will help current homeowners from avoiding foreclosures, help increase home values across the country, or stem the country's rising unemployment rate. But this is Huckabee's biggest economic reform initiative and has been the most talked-about issue on the campaign trail.

John McCain is often referred to as a maverick within his own party, in due part for his willingness to cross party lines and push for bipartisan economic and government spending reforms. But that is for another debate on another blog. On his Web site, the Arizona senator devotes 1,423 words towards his "pro growth tax" agenda. It's the only section on the site that addresses the economy in-depth. Like his fellow contenders, McCain makes no mention of the housing crisis and its massive impact on the economy.

Republicans, for the most part, support President Bush's approach on the subprime crisis, which involves getting lenders and mortgage-bond investors to agree voluntarily to modify some troubled loans. The Republican candidates haven't unveiled separate plans like the Democrats, but Romney and McCain have indicated that more might need to be done if the situation worsens. But I ask: How much more will the housing market need to deteriorate before these candidates fork over a viable solution? I'm hoping it doesn't happen four years from now, when it's time again to elect another president. I'd also like to add that my idea of a solution does not have to come in the form of a government bailout.

Do you think that the housing crisis should play a bigger role on the Republican campaign agenda?

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Jonelle Simons
Windermere Real Estate - Park City, UT

It's obviously a huge problem... I think the dems have it a much better plan, at least that they're talking about!

 

Jan 30, 2008 02:03 AM
Kirk Williams
Private Venture Capital - Everett, WA

Short of tweaking some existing laws there is really nothing for government to do. They already missed the boat due to their lack of oversight which is there job!

Regulation, laws whatever does not change bad behavior. The death penalty is a good example.

Good old fashioned risk analysis will cure this.....period.

Barney Frank (D) is an idiot. He runs into a burning house while it is on fire to see how it happened. The result will be instead of Barney getting burned, the consumer in the end will be the burning victim.

You do not want "DC" screwing with this because if you happen to sit in on some of the hearings it is very clear the "members" have no grasp of the problem, they have no idea how the origination process works and certainly have no idea about Wall Street and their role in creating, rating and selling these loans and making a PILE and I mean a PILE of money.

They should start on Wall Street then work backwards but they won't.....it is campaign season!

Jan 30, 2008 02:09 AM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy
One thing to keep in mind in relation to home values and the FairTax... there would be tax on new homes, but not on existing homes, so there would be a competitive advantage for existing homes during the transition period while builders are figuring out that their expenses are going down and they can truly charge less.  So, values for existing homes would not plunge in any way shape or form.  
Jan 30, 2008 02:20 AM
Chris Rosendale
CR REALTY - Centreville, MD
Maryland Realtor
I wonder if the government could force lenders to forgive late fees and set home owners up with new intres rates that are fixed and not bad for the home owners who need it. Over look credit and start the owners who already have a mortgage that are in a struggle get on tract. It would help out everyone because the owner will not lose there home owner ship, The lender will not have to short sale or foreclose and lose all that money that ends up being a lot of money and it would help the home owners who are doing good because they will not have the large amount of foreclosure effecting the value of there investment. Also lenders could have hassle free help for owners who just seem to make wrong decisions. Some people will say it's there fault for making wrong decisions which it very much looks that way but when some people repeat and continue do make wrong decisions it may be a little more then that it could be a illness or a brain miss fire and they need help or some sort of guidance. I may be all wrong and it may be an idea that most will find to be dumb. But in just about every case for people who get behind it is  a snow ball effect that gets bigger and bigger. Any lender or debit collectors answer is to add late fees well the snow ball just got even bigger and now that bill may get paid but with the late fee it made another bill late so it will now have a late fee. This may help some and some will just do better for a while then head back down the road they were on, but others will do what ever they can to keep there self together if they just had some help other then when will you pay they may pull threw. I may sound elementary for I am a Realtor and not any way a writer it was just a thought I had in one step towards a solution of many needed ones
Jan 30, 2008 02:57 AM
Anonymous
Amy Le

Chris,

I think you hit the nail on the head. We live in a country were it has become "normal" to build credit card debt, college loan debt, and now housing debt. Maybe we take after our government which is in some $9 trillion deficit. The U.S. dollar continues to lose value and our government continues to borrow billions from China. If nothing is done to remedy the housing crisis, we will see an avalanche throughout the entire financial sector. I have no problem with the mortgage industry comming up with a solution, and to leave the government out of it, but something has to be done.

Jan 30, 2008 03:11 AM
#5
Kirk Williams
Private Venture Capital - Everett, WA

"force lenders to forgive late fees and set home owners up with new interest rates that are fixed and not bad for the home owners who need it."

I am for a remedy. How would you establish "need"? If they intuitively knew they were over their head should lenders or more importantly tax payers fund "stupid" or mis-guided behavior? Are we to pay for people who drink gasoline even though they instinctively knew it is bad for them? REMEMBER, 95% of the mortgages out there perform fine. There is a very small percentage of "bad behavior" out there contrary to myth. People went "rate shopping" and they got what they asked for.

If I could count the number of times I "lost" clients because I advised them to build better credit history then buy or telling them they were not ready, then watch them go to a "bucket shop" and get a loan. I for one will not pay for such an idiot.

"We live in a country were it has become "normal" to build credit card debt, college loan debt, and now housing debt."

Incomes are dropping in America. Certain sectors are OK but the vast majority are not. Debt is not a bad thing if it is managed. Unfortunately the "debt peddlers" banks, credit card companies, finance companies prey on people every day. If you want to regulate that is where regulation should begin.

Cost to obtain an education is not cheap. Health Care and name the rest not cheap. So debt is a necessary evil. Look at our incomes today, the cost to buy a home and compare that to 30 years ago.

I respect very much both the sentiments expressed by you Amy and Chris. We all must quit looking to superficial solutions and knee jerk responses. Bail outs or looking to government is only going to re-enforce bad behavior and cause great resentment due to the disappointing and unintended results due to regulation.

Again, I emphasize oversight. Mr. Frank has been sitting on that Finance Committee for a very long time. Where was he, his fellow democrats and where was Bush and his fellow republicans? Since I am not a shill for any party the answer is simple. Looking out for themselves.

Jan 30, 2008 03:58 AM
Chris Rosendale
CR REALTY - Centreville, MD
Maryland Realtor
I agree we should not pay for some one who is not paying there bills. But if you are a home owner and the foreclosure rate is high in your area then you are paying. Try to sell your home now when the foreclosure rate is high verse before. Will your home comp high or low now? Not everyone is as smart as you and make right choices and need there hand held and it is hard for someone that does not need any help to put there self in the shoes of some one who is in a struggle.
Jan 30, 2008 04:09 AM
Kirk Williams
Private Venture Capital - Everett, WA
That's a fair point Chris. We need to proceed into those waters carefully and to date I see a lot of "waders" going in blind.
Jan 30, 2008 05:14 AM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Incomes are NOT going down.  Home prices in the majority of markets ARE inline with incomes. 

But, the biggest issue here is this.  If someone picked up a $600k home on a 3.25% interest only ARM based on the LIBOR, they NEED to be slapped.  What fixed rate can they now afford?  And, why should they be rewarded with a below market rate so that they can keep the house they couldn't actually afford, when the buyer two streets over took a responsible 30 year fixed at 6.25% for his house... and he isn't getting the bail-out?  

That is my whole issue with this bail-out talk.   

Jan 31, 2008 03:16 PM
Chris Rosendale
CR REALTY - Centreville, MD
Maryland Realtor
As I agree with you some Lane it is not fair to the responsible home owner, but is it fair for the responsible home owner to sell his house for $50k less because there was 5 homes like his that where short sales or foreclosures that drove his value down. Maybe Wages have not gone down "YET" but the unempolment is going up more and more so if it continues I bet wages will go down as well. I hope not but very possible. O and some people like I said before do not have the brain to know what is a good mortgage only what there lender tells them and others are smart enough to know what they should do and some people just got lucky and fell into a good loan. All I can say is it may not be fair but if it would help towards this mess i'm all for it. I would not say it is a reward, How bout if they gave them the break then tack it on to the end of there loan?
Feb 01, 2008 12:47 AM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Chris, should we let the foreclosures bleed the system for five or six years, or should we let the move through fairly quickly and then allow the market to normalize?  Forestalling the problem isn't making it go away, it is just extending it. 

If someone doesn't know what a good mortgage is, should they not investigate a little?   

 

Feb 01, 2008 03:31 PM
Chris Rosendale
CR REALTY - Centreville, MD
Maryland Realtor
Lane, I think you are right the problem will not go away. Some home owners would be right back in the hole they were in and some will not. It may also make thing's happen at a slower pace instead of all at once. As far as people who should investigate a little more you are right but you are saying this from your world and not from someone who is good at making decisions. I mean there are people in this world who will go buy a truck at a car dealer and pay what it say's on the sticker because they don't know how to get a better deal. Then in the lending business you have some one telling you that you can afford a loan cause they can give it to you at this low rate and then people get excited buy a home then the loan that there lender say they could afford did not know they now had to live like a hermit and pray that nothing would break on the house or car and don't think about going out to dinner cause we can afforded the house but thats all we can afford. When some one tells a person that is not as smart as you they can afford so much then they think they can to. When you look and say yea but what if something goes wrong, other people do not have that wired in there brain. So they need there lender to say sorry but you cant have every penny you make going to pay for your home or adjustable rate loans, lenders push what they can to get the money to the people so they can get paid. They don't say this is not really for you the loan that is best for you we can only lend you this much but thats not what they do.
Feb 01, 2008 11:29 PM