Obama policies to deemphasize homeownership?
A retreat in government programs and support for homeownership may be imminent according to an article published in the Washington Post on July 21, 2010.
The administration's narrower view of who should own a home and what the government should to do to support them could have major implications for the economy as well as borrowers. Broadly, the administration may wind down some government backing for home loans, but increase the focus on affordable rentals.
The shift in approach could mean higher down payments and interest rates on loans, more barriers to lower-income people buying houses, and fewer homeowners overall, government officials said. But it could also pave the way for a more stable housing market, one with fewer taxpayer dollars on the line and less of a risk that homeowners will not be able to pay their mortgages. And it could spell changes throughout the financial markets, as investors choose new places to put their money if the government withdraws some incentives for investing in the U.S. mortgage market.
The policy shifts described in the story are likely to be realized in a housing finance reform bill expected to make its way through Congress late this year or early next. The federal government has long encouraged and supported homeownership, perhaps (some would argue) to the point that these policies caused the housing crisis the nation is currently weathering.
There are other subtle signs that the Obama administration may be less enthusiastic about homeownership than its predecessors. For example, members of his administration have proposed scaling back or eliminating the mortgage interest deduction, and for the past two years the administration hasn't formally recognized national homeownership month.
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The housing industry has been the result of a "domino effect." The foreclosures with which I am familiar had to do with the extreme downturn of the economy in the past year. Many lost their jobs, many lost their businesses, and many had their job positions downsized to create a lesser paying income. I have not dealt with the Barney Frank created home owner - if they breath let them have a roof over their head. How ludicrous! I have always received a pre-qualification on every buyer with whom I have worked and if their score was less than 650, then I would help them increase their score, via classes and have them work with the loan officer. There are very few reasons a home buyer should have a score less than 650. One of my sellers who ended in foreclosure offered Bank of America partial payment, interest payment or any reasonable way to avoid foreclosure - to no avail. They said "no" to any and all reasonable request by the purchaser. The best solution is to reduce all mortgage holders, who are current, to 3.5% interest rate and that would boost the economy faster than any other slow moving plan out there. The politicians go bonkers with this saying, "Oh, so now you want us to set the rates!". No, we just thought a bank would rather receive the principal with a little interest, than to receive nothing in the form of a foreclosure. To date, I have no buyers who have had to file for a foreclosure. The clients with whom I have worked, were my sellers who had to list their homes, prior to foreclosure. Martha Dodd-Slippy, GRI, ABR, SRES, SRS, SFR, NC and VA Broker - Associate
Prices of homes have to be more aligned with incomes. People have the right to demand reasonable prices and quality, as well.
This does not sound as much like deemphasizing homeownership as it does getting our economy stable again. Selling foreclosures is a major part of many REALTORS' business right now. But I think we would all be better off down the road working with prequalified buyers with stable jobs buying new or existing houses. We are resourceful professionals and we may have to alter our approach to coincide with getting people back to work and rebuilding of our economy.
I wholeheartedly agree.
Not at all suprising. If you are paying your rent to the government, they have more control over you.
The vast majority of foreclosures have been among homeowners with homes less than 1,600 sq. ft. , including townhomes, condominiums and small first-time homes purchased by those with marginal credit. The "we want it now" attitude among some buyers made them stretch beyond their means. It was way too soon to manage too much debt. There is nothing wrong with a buyer waiting until enough is saved for a substantial down payment to avoid higher interest - avoid nearly 100% of a payment going to interest and PMI. I support discardinging policies that provide artificial and temporary "buying power" in favor of allowing natural market forces and real ability to purchase dictate market demand. The fast pace of the market leading to the 2005-2006 peak may have felt good at the time but the hangover is disasterous and recovery will apparently take more than double the time it took to run up the massive unsecured debt. While I applaud those first-time and other buyers who sacrifice other possessions to have their own homes I cannot condone buying on a "whim" or a "maybe" with the idea that if things don't work out they can just walk away. The latter is a symptom of a society that does not hold responsibility and accountability high in its ideals.
Thank you for posting this important information. Realtors not only need to keep ourselves aware but let homeowners know as well!