Rescuing The Housing Market
A reader suggested a topic on government rental subsides and housing prices. “My weekend topic suggestion is how Section 8 and other government programs that assist the poor with their housing costs act to set an artificial floor under the real estate prices. The housing vouchers are in my opinion nothing but a pass through to the landlord.”
“I know landlords that had modest houses that rent for $850-1100/mo to people who don’t work, but get housing subsidized by the state of NY in the Albany area. & this was ten years ago! These rates imply you must make $50 grand a year just to compete with the people on welfare.”
The New York Times. “For decades the Antelope Valley was just a remote sweep of small towns. More recently, the area boomed and the population grew exponentially as scrub brush gave way to relatively inexpensive housing. Then came the bust. Thousands of houses sat foreclosed or vacant, while others were bought up by investors who did not necessarily live in the city but were eager to rent out the space. That left a prime opportunity for Section 8 recipients, who were thrilled by the relative bargains.”
“There is a widespread resentment against the influx of Section 8 participants in the area. The local newspaper, The Antelope Valley Press, prominently features stories about people with any kind of Section 8 violation. ‘I hate Section 8′ became almost a rallying cry — a Facebook page by that name featured pictures of some rental homes. In January, the garage of one such home was spray painted with a racial epithet and the ‘I hate Section 8′ message.”
“In many instances, the compliance investigations have led to recipients losing their vouchers. According to the lawsuit, more than half of the county’s proposed revocations came from the two cities, though fewer than 20 percent of the county’s roughly 21,000 Section 8 voucher recipients live in them. ‘They’ve made criminals out of everyone associated with Section 8,’ said Jesse Smith, a leader of the local N.A.A.C.P., which is a plaintiff in the lawsuit. ‘They just want to keep everything the way it was for the good-old-boy network.’”
“Section 8 housing vouchers were created under the Nixon administration as a way to break up poor enclaves in urban centers and allow more people to move to the suburbs, where they could, potentially, get better jobs and their children could go to better schools. Recipients are typically required to spend about a third of their monthly income on rent. In Los Angeles, there is a 10-year waiting list for the vouchers. Once a resident has a voucher terminated, it is difficult to have it reinstated.”
From ABC News. “Uncle Sam is landlord for at least 90 thousand homes that owners lost to foreclosure, and tens of thousands more in the pipeline. The Federal Housing Finance Agency (FHFA) is asking for information from industry and the public on what might be done with the inventory currently held by mortgage giants Fannie Mae, Freddie Mac, and the Federal Housing Administration. One option: turning foreclosures held by the government into rental homes.”
“That way, cheap foreclosures would not compete with other houses on the sales market.”
The Post & Courier. “Strapped as it is for funds, the government could still make a big contribution to economic recovery if Republicans and Democrats can agree to finance the orderly rescue of the real estate market for housing. The government already stands to lose $400 billion or more in this market because it guarantees most home mortgages, and many of these will fail. Indeed, it already owns about 250,000 foreclosed homes, The Associated Press reports.”
“It would be far better to bite the bullet now and create a government fund to absorb a significant part the remaining housing losses yet to go on bank balance sheets in exchange for financial community commitments to keep people in their houses through mortgage modifications.”
“As it did in resolving the terrible savings and loan crisis of the 1980s and early 1990s, the government could also take possession of abandoned properties and wait for a favorable moment to resell them. One step in the right direction came Wednesday from the Federal Housing Finance Agency which announced that it is seeking advice from investors on how to rent foreclosed properties in the federal inventory to keep them from dragging down property values in their neighborhoods.”
“Rescuing the housing market offers a better way to use federal funds to revive the economy than subsidizing public sector jobs.”
This Press Enterprise article was in the desk clearing post on Friday. “Backers of HR 2636, a bipartisan bill, of which Rep. Gary Miller, R-Diamond Bar, is the lead sponsor, say that in today’s economy, with weak home sales, converting foreclosed houses to rentals would get foreclosures off the market more quickly and lessen the decline in home prices.”
“They also say lenders could turn foreclosed homes into revenue streams by renting them rather than letting them stand vacant. It is also possible that by the time the houses are sold they will increase in value, allowing the lenders to cut their mortgage losses. A strategy of allowing investors to convert foreclosures to rentals seems to have more support in the White House.”
“‘The basic idea is for Fannie and Freddie to move their foreclosed properties onto the rental market as opposed to the housing market until prices begin to rebound,’ said Jared Bernstein , an economist who left the White House housing finance team in May.”
That’s some progressive thinking there, White House. Gotta keep those housing prices up!
“Gotta keep those housing prices up!”
How does propping up housing prices promote “repair and recovery” in the housing market? Isn’t it unaffordable prices which got us into this mess to begin with? And wouldn’t affordable (i.e. lower) home prices restore liquidity and financial stability to the housing market?
As to “new ideas” for selling foreclosure homes, no-reserve-price auctions work quite well as a mechanism for revealing the actual fundamentally-determined market value of homes, compared to lies perpetuated by market manipulation.
White House seeks ideas to shrink foreclosure glut
By Margaret Chadbourn
WASHINGTON | Wed Aug 10, 2011 12:39pm EDT
(Reuters) - The Obama administration is looking for new ideas to shrink a glut of foreclosed properties held by mortgage finance giants Fannie Mae and Freddie Mac that are weighing down the housing market and hurting home prices.
The U.S. Treasury Department, the Federal Housing Finance Agency and the Department of Housing and Urban Development said on Wednesday they were considering alternatives including turning the foreclosed properties into rental homes.
“It’s critical that we support the process of repair and recovery in the housing market,” Treasury Secretary Timothy Geithner said in a statement.
“Exploring new options for selling these foreclosed properties will help expand access to affordable rental housing, promote private investment in local housing markets, and support neighborhood and home price stability.”
…
So you think it’s preferable for the gov to unload all the houses it holds at once, at no-reserve auction, rather than rent them out and sell them as the market and economy recover? Wouldn’t the first course result in massive losses for the gov (ie us)?
What’s preferable: much cheaper houses, or a much lower national debt?
“Wouldn’t the first course result in massive losses for the gov (ie us)?”
Where did I say ‘all at once’? I didn’t.
Selling F&F REO to the highest bidder, at a slow pace as needed to avoid crashing the market, certainly seems preferable to what they have been doing, which is holding vacant homes off the market and letting them crumble into desuetude, which is obviously a great recipe for massive losses.
Well, if they’re selling off a large inventory of houses at a slow pace, and you don’t want them to crumble into desuetude in the meantime, then renting them out until they sell sounds like a pretty decent strategy. I’m open to better ones…
I agree the rental strategy is an improvement. I’m just trying to imagine what they will do to screw up this seemingly-reasonable idea.
The only thing I’m open to is to sell ALL of these dumps at public auction and then shutdown Phoney &Fraudie. And that means ALL of them. And how is *affordable* housing “crashing” the market? You HBB Brothers and Sisters of mine are really getting soft. You’re all soft. You’re here championing that a Super HUD be formed. That’s exactly what this is gonna be.
I’m here to demand and champion affordable housing. The rest of you can go on day after day splitting hairs and buying into bullshit diversionary tactics by the Housing Crime Syndicate but I’m not gonna.
And no I’m not gonna get involved in your political/election dick measuring contests either. All this bullshit has gone on long enough.
And the most important point. Nothing is sacred. NOTHING. Nothing is more important to me now than affordable housing. Not Obama, not ideological positions, none of it. This is the Housing Bubble Blog and for me, one of it’s functions is to telegraph to the Syndicate Operators that we know and understand how the Housing Crime Syndicate operates and they’re being critiqued, watched and will be judged by us. There is nothing more grassroots than that.
“The only thing I’m open to is to sell ALL of these dumps at public auction and then shutdown Phoney &Fraudie.”
RAL for president!
And I won`t even ask for a measurment.
It’s all getting very old Jeff. I read your post below and just shake my head in disbelief. Like you, I honestly don’t know how folks are making it. Especially here in downstate NY. Huge property tax bills will be mailed out in the next 4 weeks. $5k is nothing. $10k is probably the average on up to $20k or more. Fuel oil prices are astronomical and onset of heating season is just a month away. Food costs are off the charts around here.
The $64k Question is;
How the #$%# are there ANY housing sales at these asking prices occuring given the current environment? I’m very fortunate(for now). I just got a $10k bonus and a $5k salary increase. My salary is 2.5x the local median and I would not risk buying a house at current prices if I had to finance, yet there are sales occurring although at half the rate of the peak.
I don’t know if you saw the response I received from a realtor and posted here the other day but they’re not backing down. They’re going to fight for grossly inflated prices like kamikaze pilots. It’s become a personal war with me.
I started a new project and the new super is a residential builder on the side. I asked him what his costs are generally….. $61/sq on your lot. That’s a bit higher than RS Means and my experience but it’s right in line with what I’ve stated for years. I assert that money can be made at that price and I think his costs are high because he’s not that good at executing based on working with him for the last 30 days.
Question #2 is;
How is a 10 year old 2000sq ft house priced higher than a new 2000sq ft house by multiples? it’s not but RealtorScum who are construction pro’s will tell you “it can’t be built for less” and they are LYING.
Back to the question of whether unloading homes at no reserve price auctions would result in massive losses:
Even though they aren’t realized yet, the losses are there; extend-and-pretend doesn’t actually avoid losses that have already occurred, it just hides them from view. The Japanese already tried this, and twenty years later, they seem to show little evidence of a real estate recovery.
Since, as you assert, the REO homes are already owned by the American people, how would selling them to the higher bidder, possibly limiting the buyer pool to end-user American families, necessarily create a loss? Wouldn’t this really be more of an internal income transfer (aka economic stimulus) without any need to raise taxes, especially if the buyer were going to be a future contributor to local economic recovery?
Why not make young, entry-level buyer families well off starting out, in order to plant the seeds of future economic growth, rather than perpetuating the economic stagnation which has been a hallmark of the Obama presidency thus far, even if not necessarily his fault? Wouldn’t a pick up in home sales generate positive economic impacts on real estate sales service providers, lenders, furniture sellers, local employers who can’t hire qualified workers, local businesses where young families spend money, and other local industries which would enjoy spillover effects?
CRICKETS!
“Even though they aren’t realized yet, the losses are there;”
Those losses would be much greater if they unloaded them all at once at no-reserve auction, if that’s your current argument (I’m having trouble keeping up). Just like a major holder of a stock rarely sells them all at once- the act itself can crater the market. (It took years to sell off the REOs from the Savings and Loan meltdown, so it’s not at all unprecedented.) The sell-off would put more people underwater, they would walk, and the deflationary spiral would continue. FDIC bailouts would cost us a fortune.
And if the gov were to rent out these REOs until they could sell them, how would that be bad? Seems like tons of houses for rent would be just what the doctor ordered in this time of economic change- people could easily move wherever the jobs were. Isn’t that a major advantage of renting?
Or is owning a house suddenly a great thing? Are the realtors telling the truth when they talk up the advantages of home-ownership over renting? I thought it was all sales claptrap, and buying a house was an unwise decision in these times.
I can’t keep up with the meme du jour.
“CRICKETS!”
Yeah, those were crickets. I live in the eastern time zone, I went to bed.
Renting government owned houses won’t lower the national debt, just open another avenue for cooking the books. The government owned houses should be valued at the present value of their rental income, less operating costs. Government can subsidise the rent, and run up more debt, or cut the rent and write down the value of its assets, to increase its net debt. Selling the houses outright for a price that will allow profitable rentals will have the same result without opening another bookkeeping scam.
What nobody seems to realize is that houses have already lost their value. That happened once people realized that appreciation above average inflation rates was not sustainable. The various schemes to keep prices above historic inflation trends are just feeble attempts to pretend outerwise. The all involve dubious accounting practices, that must eventually come to light.
Anybody who has observed the plight of residents in urban public housing projects should be aware of the pittfalls of government owned housing.
“That’s some progressive thinking there, White House. Gotta keep those housing prices up!”
It aint working for me. When Obama was elected…
I had $100k in the bank. I now have $20k (money into my small business to keep everyone and everything paid) along with a shrinking salary (skipping paychecks for me).
I had health insurance along with my 3 long time employees.
4 months ago I had to say… Boys, it`s health insurance or paychecks. What`s in gonna be. (They went with paychecks)
I have continued to pay $1,700 a month rent (as I have since 2005) to 2 different LLs. The first short sold his house for $150k less than he owed after collecting at least 2 years of rent without paying the mortgage and the second who somehow got a mortgage workout on a house he doesn`t live in after not paying for 10 months and what I can only assume is a reduced payment on a house he paid $147k for in the mid 90`s and took $150k “home equity” out in 2004.
There are houses I would buy for the same price that was paid for identical houses in the last 2 months in the same neighborhood sitting empty as the 2 have for a year and not for sale. 1 Bof A and the other still shows as pre-foreclosure.
I know way too many people including people we work with who have not made a mortgage payment in going on 3 years or longer while I pay what now amounts to half my take home income in rent to a bailed out LL.
I don`t know what kind of thinking is running this show but as I scratch and claw at 51 and physically work many days like I was 28 just trying to hang on. It aint working for me.
Do you think things would have progressed differently with someone else in the White House?
ISTM, that the trend of increasing health insurance costs would have continued. Would the deadbeats have been thrown out under a different administration?
McCain might have made it worse.
Ron Paul would probably have fought a losing battle with a Democratic Congress to cut spending for the first two years. Or, if successful, we would have seen massive layoffs of public employees while the private sector was shrinking.
Without the opposition to Obama, would the Tea Party have become a force to be reckoned with?
Without the stimulus, how long would the economy have continued to lose 750K jobs per week?
“Do you think things would have progressed differently with someone else in the White House?”
Got me. The only thing I am fairly sure of is if the last 2 administrations had let the housing market correcet without all these BS programs for victims and bailouts for banks that I and many other people would own houses that they could actually afford and pay for along with much more affordable rent for those who didn`t own or lost their homes to forclosure. I could be wrong but I always figured really low or mid 90`s house prices would be a true stimulus for the economy. Might be bad for banks or pension funds or whoever owns the cr@p but it would have people buying appliances and furniture, hiring electricians etc.
As far as “the stimulus” goes as near as I can tell is that just allowed a lot of people who would have lost their jobs another year or two before they lost them anyway. But hey, I`m no Christina Romer so who knows.
jeff saturday, my experience is very similar to yours. The business environment is absolutely terrible and it appears no one is at the helm.
I like analogies, so we have the Exxon Valdez careening towards the rocks - the captain passed out from alcohol at the helm. Finally we get a new captain - hope and change he tells us. He takes a look around the bridge and decides this is not his doing or his problem and goes downstairs to continue his agenda of upgrading the crew quarters. IMO the current guy who should be at the helm is behaving very much like this and no one has control of our runaway tanker.
So yes Obama did not get us here, but for those who believe this is not his task to fix, can we get him out and get someone (I don’t care if they are D or R) in who will take responsibility and start focusing on what can be done to start righting our economy. IMO this is going to take a pretty strong minded, determined and focused president indeed.
“When Obama was elected…”
When Obama was elected the depression we are currently in was just getting started. Think that might be a factor in your chronology? Perhaps you’re mistaking correlation for causation?
I do not think anyone blames Obama for what happened before he was elected. He did however accept a job position that required he take action to try and fix things and IMO this starts with small business, but Obama does not much care for small businesses seeing them more as a crowd of rich aristocrats in need of taxing some more.
In the mean time we careen out of control to some outcome no one wants much to think about.
required he take action to try and fix things and IMO this starts with small business,
You mean like the bill that would have taxed the offshorers and given the tax breaks to small businesses who hire American workers? That kind of action? Obama advocated that bill, Dick Durbin wrote it*, and the REPUBLICANS FILIBUSTERED IT. That bill and another 300+ bills that the Dem House passed and the Republicans blocked from an “up-or-down vote.” How many times does this have to be repeated?
The Republicans are like the two year old who drops the glass and then points at baby sister. That’s why it looks like nothing is getting done.
——————
S.3816 2010 D. Durbin. If I’m not posting it, then ecofeco is posting it. Every darn day.
A great deal of time and effort was wasted on Obamacare when the “elephant in the living room” was the economy. Had Obama done right by the people he would have earned and had their respect and support. IMO he has not done either and certainly has done zip for my small business, the economy in general or anything else for that matter. He had the support and moral imperative, but it is clear like the disaster of a president who preceded him he does not have our backs!
So far I give him a D when it comes to performance and I really wish he had come through for us!
Fixing our broken health care system is one of the key issues in our economy. I don’t think Obamacare was the right fix, but it was the only one that could pass Congress.
“time and effort was wasted on Obamacare when the “elephant in the living room” was the economy.”
When people talk about our ‘unpayable’ future debt- they’re talking about health care. If you don’t realize that, then you’re not seeing the big picture. Compared to our health care problems, everything else- including housing- is peanuts.
Source: Federal Housing Finance Agency
About the federal landlord program
•The deadline to submit ideas to federal housing officials is Sept. 15.
•For more information on the guidelines for submission, go to the Federal Housing Finance Agency website at http://www.fhfa.gov or e-mail reo.rfi@fhfa.gov .
Section 8 influx = coup de grace for local housing market decline. First Uncle Sam promotes policies which lead to many, many people buying houses they cannot afford. Then when these people leave, because they cannot afford to pay their mortgages, Uncle Sam promotes other meddlesome housing policies to make it possible for other people without the means to afford living in that neighborhood to move in, on other people’s dime. This latter group may create unintended consequences for the residents who actually can afford to live in the homes in the area, in the form of neighborhood decline. But at least the vacancy problem will be resolved, however unfairly.
It’s a good thing there’s no budgetary constraint at the federal level, otherwise the market would set rents market by market, instead of the feds.
One of the big problems in the AV is that the subsidy is set county by county. The AV is an appendage of LA county and follows those subsidies. Section 8ers already in the program can stay in Sylmar in a 2 bedroom apt for $2000/month or move up to the AV into a 4+3 SFR for the same price.
If one need not worry about the commute (due to the lack of employment) it is truly a no-brainer.
This is what has AV homeowners up in arms.
Not just neighborhood decline, but higher rents for the people who are NOT on Section 8. I was floored when I read the $1234 figure in Florida, where the gov kicks in $1234 and the renter kicks in $275 or so. It’s a wonder the LL’s let in working folk at all. Much easier to sit back and collect government cheese.
I lived in a peaceful neighborhood in Fresno. Lower middle class, but very quiet, from 1968 to 1978. Then the 4 acre empty field across the street from our house - the field where we played baseball with other neighborhood chidren - was turned into section 8 apartments.
This brought drug dealers to the neighborhood. More crime. One night there were two separate stabbing incidents in the same evening a block apart. We were used to police coming into our back yard to look for suspects.
There was an F-14 gang fight on our front lawn one late evening. I slept through it. My bedroom window was next to the front lawn. My dad and I built a wooden shield out of 2 by 4’s in hopes it would block bullets from hitting me through the window.
A year after I left the house, someone killed somebody across the street, shot him in the face point blank.
Section 8. Thank you libtards.
“Section 8. Thank you libtards.”
Stupid is as stupid does.
““Section 8. Thank you libtards.”
Section 8 was started by Richard Nixon’s administration. You’re welcome.
How ironic.
Also remember that Nixon opened the door to Communist China, a key factor in the current decline of American power, he ended the gold standard, helping to explain a 98% drop in the gold-denominated value of the dollar over the next four decades, and he was almost impeached for crimes related to the Watergate burglary.
Have I left out any noteworthy accomplishments of this great Republican president? I have a perfectly clear memory of when one of my grade school friend’s mom predicted back in 1968 that America was doomed once Nixon took office; how prescient of her!
Also worth noting: Henry Kissinger, who was Nixon’s Secretary of State, later served as Timothy Geithner’s mentor.
In those days there was only Barry Goldwater, who was still vilified for his 1964 campaign. But he was the only real Republican (for no interference in our private lives, for separation of church and state, for no entangling alliances, and for downsizing government).
The Republican powermen were Nixon, Kissinger, Nelson Rockefeller, Gerald Ford, Bob Dole, - all socialists, but to a lower degree than the Democrats.
“Have I left out any noteworthy accomplishments of this great Republican president?”
Creation of the EPA? Creation of OSHA? Passage of the Clean Air Act of 1970?
And his Navy Seal swim bodyguards’ girlfriends taught me how to swim, when I was a wee lad vacationing on Key Biscayne, where Nixon kept his ‘Winter White House’, and we stayed at the same hotel that the Seal team did. (Even at that young age, I could tell those girls were hot! It gave me something to swim towards, that’s for sure;-)
‘Backers of HR 2636, a bipartisan bill’
Where is the “conservative” opposition to this govt intervention in the market?
A lot of criticism of Section 8 seems to be on the concentration of poor people. There’s always going to be poor people and they have to live somewhere. I can’t understand how then the govt can try to manipulate prices up and at the same time subsidize rents in one area. Don’t want these poor folk living next to their mcmansion?
‘This is in response to the July 24 editorial, “Housing list an important step for Novato” and its comment that if the state doesn’t require cities to plan for affordable housing, it won’t get built. Perhaps that is true with other Marin towns and cities, such as Ross and Belvedere, but it is an inaccurate statement about Novato.’
‘The truth is, according to the Association of Bay Area Governments, Novato has 20 percent of Marin’s population, yet it shoulders 33 percent of Marin’s affordable housing…Novato can be proud of being the leaders in affordable housing; however it cannot sustain itself by taking the lion share of the social burdens of this county.’
‘Perhaps the rest of Marin can help us with all of the crime and gang activity in two of our multi-family, low-income rental projects in Novato before we take on any more.’
The original post cites the statistic that 20% of LA county section 8 lives in the AV. 21000*.2=4400. To make it simple let’s inflate the number of households in the AV to 110,000 (from 75,000) giving us roughly 4% Sec. 8 occurrence.
LA county as a whole has about 2.5 million households and therefore less than 1% of households are sec. 8 countywide.
How is it fair that one section of the county have 4 times the occurrence of subsidized housing?
Maybe they should set the subsidies by zipcode instead of by county?
“Section 8 housing vouchers were created under the Nixon administration as a way to break up poor enclaves in urban centers and allow more people to move to the suburbs…”
Odd, I never considered Nixon to be liberal.
I never considered him to be a conservative. Lots of liberal bills passed during his admin, the EPA for one, IIRC.
EPA, yup. It was Nixon. His removal of gold to back our currency was certainly not a capitalistic gesture either.
Don’t forget the Nixon “price controls” — a really dumb idea to control inflation which led to long (communist-style) lines at the gas pump.
Nixon was not a conservative, certainly no capitalist. Not a social conservative either (thank Dog for that). I was in junior high during his second term, but I had lots of discussions during lunch with an anti-Nixon buddy and a pro-Nixon buddy. Section 8 turned me into a capitalist, it really politicized me against entitlements.
Yeah Bill my father was a bricklayer and the city wanted to do some urban renewal it was a slow time anyway, so they asked for union workers to work for a lot less to help build nice homes for these people.
within 3 years my father used to cry every time he passed by the homes lots of 2 story small rise and only a few 8 story high rises.
how can people rip off front security doors, steal the iron railing (great for kids falling off the porches..)
But the worst was people took sledge hammers and busted a lot of the concrete steps why? …. then my father said NO More helping poor people. Never gave at church or any donation drive unless the money was going overseas.
Good anecdote. In every case I’ve seen discussing section 8 with libtards who are advocates of section 8, they were all born with gold spoons in their mouths. They were sheltered/insulated from the ugliness that their socialist policies created.
Ironically they arrogantly consider themselves super intelligent people when in reality they are clueless bimbos.
The only person I have ever known that gets Section 8 is an old white woman with significant health issues.
Perhaps Section 8 has not had the desired effect of ridding us of low-lifes. Was isolating them in large projects in large cities a better course of action? Or should we just let them build shanty towns, like in Jamaica and Rio?
Maybe forced sterilization is the answer.
Then you lived a sheltered life. You have to live among those slum scums to see how much worse than animals they are in general.
Why just give the thousands of empty FEMA trailers to section 8 peeps
Whats wrong with trailers for poor people? a trailer park with full time security guards…..if ya dont like it..well stop having kids, get a job and move out.
Ok it wont work in NYC, but it will in 90% of America, put them next to a major bus line or a light rail stop…..
“stop having kids”
That’s closing the barn door after the horse has gotten out.
“Then you lived a sheltered life. You have to live among those slum scums to see how much worse than animals they are in general.”
I have lived in low rent neighborhoods. If my neighbors were Section 8, I was unaware of it.
“libtards who are advocates of section 8, they were all born with gold spoons in their mouths. They were sheltered/insulated from the ugliness that their socialist policies created.”
Don’t you mean they were winners, or ‘producers’. Of course they stuck the low-life parasites amongst you losers. Where else would they put them? Not in the winners’ neighborhood. They were too busy producing jobs for you folk.
CRICKETS!
I guess it’s no fun when your rhetoric gets used against you.
“The Federal Housing Finance Agency (FHFA) is asking for information from industry and the public on what might be done with the inventory currently held by mortgage giants Fannie Mae, Freddie Mac, and the Federal Housing Administration.”
Hey assholes, sell it!
I knew it! I’m surrounded by assholes! - Lord Dark Helmet
“Hey ********, sell it!”
How did that get past the goalie?
Context… curse in reference to a quote from a Mel Brooks film from the 80’s and you have a good chance. Good luck!
“One option: turning foreclosures held by the government into rental homes. That way, cheap foreclosures would not compete with other houses on the sales market.”
Here is a prediction for you: Whatever the command-and-control deciders decide to do will make the housing situation worse and result in heaps of blame on the DC deciders.
Bottom line:
1. Housing is a private good; there is no proper role for the federal government in the housing market.
2. The market would operate much better without so much government “help,” aside from establishing and maintaining a rule of law.
3. Given other budget priorities, we cannot collectively afford to throw away federal money on housing interventions designed to give whatever group D.C. decides to reward a leg up on others.
“1. Housing is a private good; there is no proper role for the federal government in the housing market.”
So, you do not see federal regulations for materials as a proper role for government. Most people do not posess the technical knowledge needed to determine the safety of all the materials and building techniques involved in residential property. Food is also a private good. By your argument we shouldn’t have food inspections and safety standards.
“2. The market would operate much better without so much government “help,” aside from establishing and maintaining a rule of law.”
Establishing and maintaining the rule of law (E&MtRoL) sounds like a small role, but given a history of housing discrimination and redlining, E&MtRoL requires increasing intervention in the market. Further, there would not even be a market if the government did not make one by backing up the loans (I mean, what banker of their own violition, without some kind of guarantee, would give any human being a loan for 30 years?)
“3. Given other budget priorities, we cannot collectively afford to throw away federal money on housing interventions designed to give whatever group D.C. decides to reward a leg up on others.”
Agree.
IAT
‘Federal regulations for materials’ falls under ‘establishing and maintaining a rule of law,’ which is a proper role of governance.
“Further, there would not even be a market if the government did not make one by backing up the loans…”
We hear that a lot, but on what evidence should we believe it? I suppose one could look at other nations where the government does not ‘make a market’ by ‘backing up loans.’ Do other countries where the government does not operate this way have no housing markets?
‘…what banker of their own violition, without some kind of guarantee, would give any human being a loan for 30 years?’
Such loans would have to be priced and rationed to factor in the risk of default. If the goal is to give everyone who can breath an affordability loan to buy a home, this will not be possible.
Good luck finding a non-government supported housing market, at least in any country of affluence. Bankers watch each other and learn, and what works one place is quickly copied elsewhere. Here’s the chain of action in one country:
Bankers want more money (always true, by the way)
Bankers realize they can supply loans to desperate families (DFs) who seek housing security
Bankers realize these DFs are bad bets to pay off a mortgage
Bankers realize that if they price in the risk, the DFs, desperate though they are, will refuse to take out the loan (even a DF will realize a 30 year loan at 20% interest minimum is too risky for them to take)
Bankers get government to back a large portion of loans as “social(ist) policy”
Government does the bankers’ bidding
Because a large number of loans are backed, large numbers of homes are transferred, making the idea of owning (really borrowing) a home become part of the dream (i.e., expectation)
This expectation vastly increases the number of potential home-buyers (to everyone who has middle class pretensions or above)
Now uncapped by the availability of long-term credit, and spurred by the almost insatiable demand, housing prices rise beyond the bounds set by people’s ability to pay in a short amount of time (e.g., 5 years)
What part of this sequence of events is untrue? If it is all true, then, really, the government, at the bankers’ bidding, made the market (or, at least, vastly multiplied its size from what it had been–a few wealthy people and those who had farms passed down to them)
Another way to put it–how much do you think cars would cost if you could buy them using a 30-year loan, backed by the Federal government?
IAT
I should amend one thing above — before government involvement, there was no such thing as a 30 year mortgage. So, the banker would have had to price in the risk for a DF to buy a home over 5 years. No DF could afford such a mortgage, even for low cost housing.
It was the advent of the 20- and 30-year mortgage that was key to making the market. And, the 20 and 30-year mortgage is a child of the union of bankers and government.
IAT
“Rescuing the housing market offers a better way to use federal funds to revive the economy than subsidizing public sector jobs.”
Why? Because the NAR would get more money this way?
subsidizing public sector jobs has not worked well for Greece or UK. As for subsidizing housing - even worse.
The best thing for government sector is a vibrant business environment generating revenue and tax.
The government sector might also want to try spending less than is received in taxes.
Dems and Repubs, FAIL.
Why not run the government like a business? If your income does not meet your expenses, raise prices, i.e., taxes? After all, none of the businesses would survive if the government stopped staffing the military (for example).
IAT
Would this be a “competitive business” so I can shop for the best rate or do I have to “assume” my dollars will be well spent? Will I have a choice but to do business with this business or will they have thugs to beat the money they expect out of me?
Raising prices results in less business in the real world and simple linear programming determines the best price point relative to sales and profit.
I would not be opposed to taxes on imported manufactured goods for example because I can elect to buy American or not to buy at all. I similarly would like to see income taxed differently for earned income vs unearned income from appreciation etc…
Beyond that we are taxed to death in the US. MY PERSONAL EXPERIENCE!
You can shop around. There are about 200 other countries to which you can move.
Also, you cannot be correct. You say, “Beyond that we are taxed to death in the US. MY PERSONAL EXPERIENCE!” As the dead tell no tales, I assume you are alive. Thus, you have not been taxed to death. Your credibility, however, has expired.
IAT
Rescuing the housing market offers a better way to use federal funds to revive the economy than subsidizing public sector jobs. It should be a key part of the growth strategy the nation urgently needs Congress to adopt.
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The government is not competent enough to rent houses. Tenants do not pay their rent just like they do not pay their mortgages. Holding houses off the market is another bad idea. A vacant house goes down in value. The government turns off the electric and the pipes freeze in winter, and mold builds up in summer.
Again, we see a clearly-expressed desire for the Masters of the Universe to try to run local markets for private goods (in this case, rental housing) from their command-and-control center inside the beltway.
My suggestion is to get the federal government out of private lending, private residential renting, and private arms-length residential sales, and let local markets restore a semblance of post-Housing-Bubble-collapse balance to the real estate sector.
REMEMBER: ALL REAL ESTATE IS LOCAL.
Hear, hear!
Can the housing market recover against the backdrop of “hooker’s drawers” stock market action?
I personally doubt it…
I like the new rules. Unlimited forbearance is clearly not a good policy, as it encourages other home owners who are current on their payments to stop making payments, thereby stiffing lenders and MBS investors. This includes all American taxpayers, who are collectively shafted with F&F losses.
Under new rules, loan modification won’t protect you from foreclosure
By Donna Gehrke-White Sun Sentinel
Posted August 11, 2011 at 10:44 a.m.
Many South Florida homeowners facing foreclosure may believe getting a preliminary loan modification offer from their lender will save them from losing their home. But, in fact, new rules approved by Fannie Mae allow lenders to continue foreclosure proceedings on those who haven’t made a mortgage payment in more than 120 days.
Those homeowners are safe only when they go back to regularly paying their mortgage, which typically happens only after a permanent loan modification is in place.
In June, Fannie Mae, which backs many mortgages in South Florida and across the country, ordered lenders not to start foreclosures on homeowners who are less than 120 days behind. Instead, lenders must offer loan modifications or other solutions.
But that’s not the case for those who are at least four months behind in their payments. Lenders can continue with the controversial “dual tracking” for them, so struggling owners can be paying in a trial modification program while going to court to fend off foreclosure.
With Fannie Mae’s backing, lenders won’t call off a foreclosure, until those homeowners prove that they can make the cheaper monthly payments, said Fannie Mae spokesman Andrew Wilson.
“We don’t want foreclosures to happen; we want to prevent them from happening but at some point it becomes necessary to proceed with foreclosure,” Wilson said.
Under the new policies Fannie Mae adopted in June, lenders can be stricter with owners with more delinquent loans — and that includes tens of thousands of Floridians, with the state leading the nation with foreclosure cases.
About 149,000 Florida mortgage holders were delinquent more than 90 days in the first quarter of this year, according to the Mortgage Bankers Association. A majority of the delinquent loans in the state are at least 90 days late, the association said. It does not have statistics for loans more than 120 days delinquent or for how many are in South Florida specifically.
…
Any chance post-Geithner federal housing policy will take a different direction?
Pressured by White House, Treasury Secretary Is Expected to Stay at Post
Larry Downing/Reuters
Secretary Timothy F. Geithner, center, at the White House on Tuesday, the same day he said he was undecided about leaving.
By JACKIE CALMES
Published: August 3, 2011
WASHINGTON — Timothy F. Geithner, the Treasury secretary and dean of President Obama’s economic team, is expected to stay through the president’s term after intense White House pressure, according to officials familiar with the discussions.
But Mr. Geithner has not yet notified the White House of his intentions, and family considerations could still win out, advisers say.
Speculation from Washington to Wall Street has intensified because Mr. Geithner, the only holdover at the center of Mr. Obama’s original economic circle, said a month ago that he would decide on his future after the White House and Congress reached a deal to increase the nation’s debt ceiling. Mr. Obama signed that deal into law on Tuesday.
Mr. Obama and his chief of staff, William M. Daley, have been urging Mr. Geithner to stay, administration officials say, not only for continuity when the economy has weakened and to avoid an all-but-certain confirmation fight in the Senate over a successor, but also because Mr. Obama has developed a close rapport with Mr. Geithner.
Whether the president persuades Mr. Geithner to stay will be a central development for the White House as it girds for a re-election race expected to turn on the economy and the continuing battle of the budget with Republicans.
Mr. Geithner has been considering an exit since early this year, administration officials say. None would speak directly on what Mr. Obama has said to his Treasury secretary because the two men have private meetings alone once a week.
…
I guess the goal is high house prices and low wages. Surprisingly this plan works great in South America.
And like a good nieghbor, DEUTSCHE BANK is there. Chris thought he got a deal and now he has bloody paws.
Owner Information
View Property Details
Name: MICOLUCCI CHRISTOPHER E
Location: 2508 PEPPERWOOD CIR
PALM BEACH GARDENS, FL 33410 5250
Appraisal ValueMarket Value: $252,109
Assessed Value: $252,109
Exempt Amnt: $50,000
Taxable: $202,109
Tax ValueAd Valorem: $4,787.12
Non ad valorem: $166.00
Total: $4,953.12
Sales InfoSale Date Sale Price
06/30/2010 $240,000
03/20/2007 $470,000
03/31/2004 $309,500
01/01/1979 $79,400
Listed today in the same hood
Jan-2006 19880/0063 $410,000 WARRANTY DEED
Apr-2011 24447/1907 $151,100 CERT OF TITLE DEUTSCHE BANK NATL TRUST C TRS
08/14/2011
2602 PEPPERWOOD Cir
$ 192,000
Apparently there is no shortage of amateur knife catchers.