RealTown's RealTalk

From what I am reading it seems as if our country has been, and is still, not only in a recession but also teetering on the edge of a depression. We all know what the effect of more bank failures will bring, and when the top banks fail as they are, it is not out of reason that people will begin to panic and withdraw their money from banks and the stock market. The questions is, will people panic?

 

The old $100,000 guarantee from the government is not much of a reassurance at these days. First $100,000 is not what it was when the FDIC was formed. A ton of people have much more than that in banks and securities around the country. And a large number of retirements plans that Americans have are tied very closely to the stock market through 401Ks and a variety of other investments. Second, as the Government would need to do to meet the guarantees, printing more money would just devalue the U.S. Dollar to point none of us would want to see.

 

We can only wait and see what happens the next few weeks and months. What effect will the elections have on all of this? Who knows. Do you feel more comfortable with Obama wanting to redistribute what little wealth there might be, do you want McCain to support the big corporations? Asked another way would be, do you want Obama to increase taxes to help distribute the wealth, or do you want to see McCain cut taxes when the country is already broke? Tough decisions. And frankly I don't know if either one of them have what it takes to lead us out of the current financial situation.

 

Another issue I believe we will all be facing soon is much more regulation at all levels of the real estate industry. I expect the Feds will begin passing federal regulations, probably through HUD, that will directly impact on each of us as Real Estate Licensees. Recently while in D.C., I heard some rumblings about some form of Federal Licensure, which would be in addition to state licensure, so action could be taken against the license of those in real estate (Realtors, Appraisers, Lenders, Mortgage Brokers) instead of going to court to take action against the individual.

 

The good thing about all of this is that I doubt NAR has to worry much about Banks getting into the real estate brokerage business for a long long time. Just think how much worse things might be right now had the banks been directly involved in all ends of the real estate industry the past 5-10 years.

 

Your thoughts are welcomed

 

Tom Hathaway

The Buyer's Agent

 

 

 

 

 

Hi --

Tom Hathaway discusses the current Wall Street meltdown and says that "I believe we will all be facing soon is much more regulation at all levels of the real estate industry. I expect the Feds will begin passing federal regulations, probably through HUD, that will directly impact on each of us as Real Estate Licensees. Recently while in D.C., I heard some rumblings about some form of Federal Licensure, which would be in addition to state licensure, so action could be taken against the license of those in real estate (Realtors, Appraisers, Lenders, Mortgage Brokers) instead of going to court to take action against the individual."

A national registration system for loan officers was established over the summer under the FHA reform bill. See:

National Registration For Loan Officers Becomes Reality

More importantly, regulations ALREADY exist that could have stopped the mortgage meltdown before it began. Under the Home Ownership and Equity Protection Act, the Federal Reserve has the authority since 1974 under Section 129 to define "unfair and deceptive acts or practices" (UDAP). For instance, the Fed could have used this authority to ban option ARMs. It could have required lenders to verify income and employment -- as it wants to do for subprime loans beginning in October 2009.

The Fed explains that the new rules are designed to "prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan."

Of course, the Fed does not want to bother its client bankers and so the new rules apply only to a few loans and not all loans -- as if there are no problems with Alt-A and prime mortgages. See:

Do New Mortgage Rules Make Borrowers Safer?

None of this is unknown or surprising. I have been arguing against so-called "affordability" mortgage products since at least 2004 and in 2006 told the Association of License Law Officials that:

"We now have a situation where stated income loans, interest-only financing, option ARMs and excess equity loans have begun to season. That means we will soon begin to see more and more of these mortgages convert to phase two, a time when monthly payments must be substantially higher to amortize the loan.

"The result is that a growing number of recent property owners will find that they have homes and investments which cannot be sold at a profit � as well as homes and investments which cost too much to carry. The fruits of this impossible dilemma will be more properties for sale, more supply, more pressure to moderate if not lower prices, more foreclosures and more bankruptcies. Even those without a mortgage may find that the value of their home will drop as neighbors who financed imprudently rush to dump their properties on the market."

See: Toxic Loans: The Coming Storm

and

Mortgage Surprise? What Mortgage Surprise?

The claim that markets can run themselves without regulation has proven to be a disaster. No one should be surprised -- but everyone should be inflamed at the failure of government regulators to protect our markets and the value of our homes.

All the best,


Peter G. Miller
OurBroker(r)
www.ourbroker.com

Tal Kramer

Tal and Jeanette Kramer
Re/Max Communities - Metro Atlanta
770-971-0025
Mobile: 678-978-1900
Kramer@MyDreamHome.com
www.MyDreamHome.com

We're never too busy for your referrals :-)

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