NAR_grey_logo-01

Real Estate is about Jobs, Posted by Ron

You are currently browsing comments. If you would like to return to the full story, you can read the full entry here: “Real Estate is about Jobs, Posted by Ron”.

Comments
  1. Raymond Spieler

    Yes, Change the policies of the “Government” to encourage home buying,
    BUT, do not have Fannie and Freddy provide guarantees to loans that are
    so weak that they will fail. Reasonable requirements are crucial.

  2. Great blog post and good reminders on how important home sales are! Here in Maine the housing market seems to be recovering and for the most part has stabilized.

  3. Haven’t the Realtor Elite in Washington learned their lessons? Government controlled housing policies don’t work. What we need is a free housing market where people have saved money for a substantial down payment and who make decisions based on their desires and wants. Policies from Washington only warped the process and keep prices unaffordable. The NAR has proven to me that they are only interested in their position in Washington and not concerned about their members or the free market. People will always buy homes because it is inherant in their nature not because they will get a tax deduction. Jobs will follow a natural market.

    What Realtors need is an equal and opposite NAR that endorses free markets and
    that hasn’t been corrupted by being inside the power structure of Washington.

  4. Why is no one addressing the LACK of real Help for Homeowners. I am involved with a pre foreclosure that just plain should not be happening. Over the past four months I have spoke with every organization connected with HAMP, Fannie, the Bank in question, the local congresswoman. All with little results.

    Why do we pay the servicers (banks) to keep homes in a foreclosure state. Spending taxpayer month to do so is nuts. We pay HUD councelors through non profits who do nothing more than tell folks they should just walk away from their homes, even when that is not what they want to do.

    It is painfully apparent that this system is just not working, and there is no accountablilty.

  5. We have a listing agent fronting for a company in India that is actualy doing all of the listing Realtors Work. All showings are coordinated from India and all negotiations are done with people in Indian. The listing agent has never seen the home and will not discuss it at all. Work normaly done by the listing agent has to be done by the buyers agent.

    Is NAR doing anything to stop realtors jobs being outsourced to India by Banks on foreclosed properties? Can it be stopped by the Federal government because in effect any money they are giving to these banks is being used to outsource US jobs to India. Can we get the states to stop it because these people are not licensed in the state of florida to sell Real Estate and they are perfoming agent duties.

  6. I have been talking about this for a long time; TV ads, internet ads have been saying money is available for home buyer’s which is a false true; the working family man is still unable to get the funds from our governmental agencies. These are the families that really need to have a home for their children. The government talks about leaving no child behind; not having funds available to this family is leaving many children behind because it forces them to continue to live in conditions unhealthy for raising children when both parents are working trying to save to buy their home but in truth are not able to save the requirement they need (set by the banks / mortgage companies); like going down a dead end street headed no where!

  7. Thank you, President Ron Phipps, for speaking on behalf of all us REALTORS! Housing is vital to our nation and we need to focus on the positive aspects of real estate and our lawmakers need to know that the only way for us to thrive as a nation is to bring the real estate market back to a normal level. The 3 steps Ron Phipps is taking to Congress will help us do just that!

  8. I appreciate this well written post on the value of housing and home ownership. Would you mind if I copied the link and put it on my blog?

    Many thanks,

    Marsha Finney
    Ebby Halliday Realtors

  9. Richard Blosser

    I have had my Brokers license in California and Colorado since 1987 and I disagree with you about preserving the mortgage interest deduction and maintaining government backing of home mortgages. One of the main causes of the housing meltdown was the pushing of subprime loans by the government through Freddie and Fannie. Just talk to any reputable lender. Second, the interest deduction is not big enough to make a difference to most home owners and we should get rid of it. We need the government out of our lives and this would be a good start!

    Richard Blosser

  10. You conclude with “As the voice for real estate, we hope that Congress and White House gets the message: real estate is all about jobs”. Our current President has been trying to stoke housing with middle class tax cuts and various stimulus programs over the past two years. Unfortunately, the opposition disagrees and thinks “big business” needs the help and has done everthing it can to oppose this President. Our middle class IS America. They are being left behind by Republicans and their hunger for lobby money. Until the “right” starts thinking about wages and taxes for the masses, the breaks will always go to the Exxon types; and the rich get richer and the middle class continue to have less and less expendable income.

  11. Newpine

    OK, we understand the importance of real estate to the economy. But wishing, hyping and lobbying doesn’t get the job done.

    Now that we have that out of the way, I would like to hear from you exactly what we should do about Fannie and Freddie. Do you think these entities should have open-ended accounts on the US Treasury?

    Should we be promoting the publicizing of private debts just to continue our business and as a means to support the economy? Is this really sustainable? Get real.

    Since we are paying you the big bucks, what exactly is your proposal for establishing a truly SUSTAINABLE real estate market? Cut out all the wishing, hyping and lobbying. Now is the time for bold, real, and honest solutions.

  12. George

    You did not mean a median score of 720, did you?

  13. Paul Ryan

    Sounds like this article only lobbies for the status quo–keep the 3 main measures in place now.

    How does that create more housing sales?

    It seems we need more aggressive recommendations–especially designed to force the big banks to lend (Lord know they have enough recent profits) before housing can recover. Without new and drastic measures–the banks will just keep building inventory (with extremely low carrying costs–that are funded by the Feds artificially low interest rates) and things will continue to stagnate. Government programs to assist underwater mortgages to refinance (with lenders also sharing in the financial hit) is probably the main missing ingredient. Until then foreclosures will still dominant and inventories of homes will still grow.

    Hopefully the NAR will come up with some more bold solutions–they have a strong lobby (that we help fund) and that should be used to convince Congress that more drastic measures are required.

  14. Ron –

    I suggest that your three points sort of want to hope to move us back to the 1990s, instead of moving forward. We’re not going backwards. The problem now with housing is artificially high prices, which seems to be related to foreclosed loans being held by the Government (whether the Fed, Fannie Mae or Freddie Mac) instead of being auctioned in the private sector. This causes a looming disaster if the percent of loans owned and managed by the US Government increases instead of decreases.

    There is nothing wrong with the government being the underwriter of last resort, IF AND ONLY IF the loans provided are at market risk. If they are not, as has been the case with mandated policies of loaning to minorities, then there is what we call “Moral Hazard” in such underwriting. That means that eventually, the bill will become due as those moral hazards create market failures.

    Further I suggest examination of the issue of inflation. In the past, serious inflation is accompanied by low unemployment. You suggest policies which would improve housing, and lower unemployment, and therefore, your suggestions would directly create inflation.

    Inflation at this time would be the natural result of the some $5 Trillion dollars printed, but it’s being artificially staved off by repressing several market sectors. Of these, housing is the key. The result of your suggestions would likely create something quite worse than the inflation we saw in the Carter years, when home loans surpassed 15%. You can’t have your cake and eat it too.

    You see, not only must that $5T be absorbed into the money supply with a consequent weakening of the US dollar, but that deficit spending will possibly continue even with the recent changes in Congress. Right now you can see their policies, as housing is stagnant and yet energy and food prices are rising. This is purposeful, and is due to the fact that government controlled entities can and will affect housing prices, demand curves and the effective interrest rates for those business sections.

    Thanks for your discussion and for the forum on which response is possible.

    Mike Hayes
    TREB #0489138

  15. Unless some changes are forced on the banks and the servicing companies the short sale crisis will continue for a very long time. The banks have no incentive to work with sellers and realtors to move these properties. This is especially true if it is a gov. backed loan. They get their money from the gov-why accept less owed? This causes the home to end up in foreclosure after months of sitting empty, neglected and harming the value of the other homes in the neighborhood. The only way to get the banks on board is to take away their right off of “toxic mortgages”. I bet they would be hiring real negotiators to move those loans off the books if they didn’t have a guaranteed safety net. Might even hire Americans instead of shipping those jobs to India.

  16. We need to reform Fannie and Freddie. The NAR proposal to transition them into Government-chartered entities to provide the public purpose, but take out most of the profit motive and politics is the most logical recommendation at this time . We need to get them healthy, providing a solid secondary mortgage market. Investors will not invest in Fannie and Freddie if it is not healthy. Maybe in the future, 5 years, it can be converted to a private structure because the private market sees a healthy entity. Our housing market is too fragile to take on a major void in our business that can’t be filled by the private sector at this point. We would see an immediate shut down of the residential market and a 30 % underwater factor would potentially double, because of the shock to the system.

  17. Frank Coon

    I agree with your numbers that for every 1,000 homes sold 500 jobs are created and I do believe that our Congress should be doing more to promote the availability of homeownership to more people. Another very important statistic is that I believe that it’s 5 new jobs are created for EACH NEW home sold. That being the case, new home construction should also have some emphasis put on it by Congress. New home construction is at an all-time low, and typically it takes about 1.25 million new homes a year to keep pace with the need, so right there is 6.25 million jobs waiting to be filled, with a ripple effect to another 10 million. The majority of new homes I believe are sold by Realtors, so NAR supporting something along these lines is a win-win situation.

  18. We agree. Real estate is a vital part of the economy and it’s important that we keep reminding customers and the government of the potential from each individual home sold.
    Great blog post.

  19. There seems to be a big disconnect between NAR’s actions on Capital Recovery Fees (Private Transfer Fees) and their ability to bring low cost institutional capital into real estate and what you are saying here. NAR needs to back up and not try to micro manage the short term economics of the housing industry. Too much short term stimulas of the housing sector and not enough emphasis on manufacturing created a retail driven boom bust economy. NAR had a significant hand in promoting this through their lobbying efforts. Take some responsibility and don’t repeat this mistake. The jobs NAR needs to focus on are not tied to construction but manufacturing.

  20. Mark

    No demand No construction. Period. End of economics 101. Have a nice day

  21. Gary H

    Government involvement in the housing market is a bad idea. Governments serve their own interests, i.e., getting re-elected and keeping and growing their power.

    “Affordable housing” is just wrapping a bad idea in the flag to make it sound good. Putting people in houses they cannot afford is not in their best interest nor in the interest of the taxpayers who are on the hook when things go south.

    The MID has made America the best housed people on earth, but what other, perhaps better investments have been foregone? Perhaps we would have more new companies, more manufacturing, better jobs, greater productivity in medicine and other industries if we had not put so much of our wealth into living well in houses that are bigger and better than we could otherwise afford, just because of the tax subsidy of the MID.

    Re the comment of Alan Schwartz: You get it! The NAR needs to rethink what they do and why.

  22. NR

    I have several cash buyers who do not need Fannie or Freddie but will not commit to buy until the foreclosures in the system have “hit bottom”. A Freddie owned unit in my area just sold at a loss on the loan amount of 35%, excluding selling costs. I know that many Realtors rely on foreclosures to put food on the table but until Fannie and Freddie are told they cannot lose infinite amounts of taxpayer money on bad loans, the market will not recover. If the owners had been told their loan amount would be reduced by 35% or repayments suspended to that value, there may not have been a foreclosure in this case. The foreclosures are also affecting “normal” values. There’s a great debate about whether a foreclosure should be used as a comp but when that’s all there is, what’s an appraiser to do?

  23. Dear Representative of NAR:

    This is an interesting post. I agree that over the long term housing price are and should be determined by employment and income. See my blog post The Truth About Home Prices at http://www.endingforeclosures.com/housing-affordability/the-truth-about-home-prices.

    The problem is that NAR’s own economist, Lawrence Yun, doesn’t seem to understand this. In my blog post, Real Estate Fiction at http://www.endingforeclosures.com/short-sale-foreclosure-help-information/real-estate-fiction I quote Yun’s own words that “With home sales heading up and inventories shrinking, prices are stabilizing. These are the key conditions needed for housing to lead the economy into growth mode. Once that happens, jobs will follow.” Yes, he actually said that absurd statement. Please teach Lawrence basic economic principles. Apparently, he did not learn this while getting his PhD in Economics, or NAR has bribed him to be a cheerleader for housing no matter what.

    The fact is that NAR has lost all credibility. All the pumping up housing nonsense needs to stop. This includes supporting all manners of artificial support for housing. This includes shutting down Fannie Mae, Freddie Mac, FHA, HUD in general, USDA Rural Housing Loans, the mortgage interest deduction, etc. Maybe when we stopped artifically creating buyers (i.e. fake demand) for homes the prices of homes would actually become affordable on their own without the need for foolish government sponsored loan programs to “make homes affordable”. Only then will we have a true, stable and sustainable housing market that does not require a typical family in America to bury themselves in debt that is 3-4 times their annual gross income that the US government (i.e. taxpayers) will ultimately need to make good on when these borrowers default.

    Signed,
    Jim McCormack
    Real Estate Broker and Agent for 12+ Years and Concerned Citizen

  24. This is really simple. Stop borrowing money. Save and pay cash for your house. Leave the banks out of the housing industry. They don’t care about you.

    I’m not sure how purchasing a house pumps $60,000 into the economy, but that sounds like a ridiculous claim.

    The deduction is a benefit for those who owe money, but it’s no reason to buy a house. If anyone tells you that taking out a mortgage is better than paying cash because you get a tax deduction, then they can’t do math. Send $10,000 to the bank to avoid paying $3,000 in taxes? Not smart.

    Moving your measuring stick doesn’t make the situation normal. We need to stop manipulating the system and let equilibrium find itself.

  25. Aggie Langschied

    This is precisely why I do not ever contribute to the PAC portion of my membership dues. It is ridiculous for Realtors to support keeping Fannie/Freddie when these government entities and their Democrat friends are exactly the cause of our recession! When you force banks to make loans to unqualified borrowers for decades, knowing that these loans would never be repaid, then packaging them up with the “good apples” on top and selling the paper to our retirement accounts – is what caused this mess in the first place. These bad apples were bound to rot through to the top eventually. The artificially suppressed interest rates only added fuel to the fire and discouraged savings on top of that. When President Bush tried to have Fannie/Freddie investigated during his first term, the Dems loudly and violently objected to any oversight of the criminal activities that were being conducted there. Not only should these be eliminated, but Barney Frank and his buddies should be taking the perp-walk.

  26. Rick Lutowski

    NAR’s position is 100% wrong:

    The mortgage interest deduction is best replaced by the Fair Tax. Think of the income tax as analogous to cancer. The mortgage interest deduction is then like chemotherapy. The Fair Tax is like a total cure for the cancer, making chemo (the interest deduction) irrelevant.

    The zero-down loan was the single biggest driver of the financial meltdown. Rather than a credit score of 720, a more relevant lending criteria would be a minimum down payment.of 10%; zero-down loans (even VA) should be totally eliminated. When homeowners have a real financial stake in their home they will have incentive to work things out with their lender rather than default in the event of financial hardship. In the 1950′s down payments as high as 50% were not uncommon, and defaults were almost unheard of. A repeat of the mortgage crisis (which would NOT be good for the real estate industry!) is best avoided by homeowners having a real financial stake in their property.

    The government should get out of the insurance business, including the mortgage insurance business. There is NO Constitutional authority for the Federal government to act in the role of an insurer, i.e., Fannie and Freddie are unconstitutional. All mortgages should use private mortgage insurance. With the government out of the mortgage business, the ever increasing load of Federal regulations on mortgage lenders will finally decrease, leading to increases in loan efficiency and decreases in costs and time to close. It is a truism that every time the Federal government becomes a cook in the kitchen, the dinner is ruined. The Founding Fathers had it right — the government has no business in the mortgage insurance business.

  27. Steven Sillin

    NAR is attempting to pursuade the Gov. to place another bandaid on Freddi and Fannie. The real problem and solutions have been offered in these postings and I hope somebody from NAR actually reads these and takes action.

    In connection to current home prices hitting bottom: I have been building homes and developing projects for 18 years and trust me, there are not many private entities left that can afford to build a home for what these places are currently selling for. We have hit bottom and it’s even cheaper for me a contractor to buy a foreclosed home rather than build it myself with my own hands. The only reason there are any sticks in the air now is that the larger publicly traded companies received govt. backed right down incentives on their existing land holdings/inventory and they have been making their sub contractors do the work for little or no profit. This is a serious problem that has been going on for a couple years thus bankrupting several hundred sub trade companies and suppliers. There is a illusion that when reports come out for new construction sales that the market is improving when in fact the workers building those homes are actually making less than unemployment pays and their employers are forced to bid jobs at or below cost in fear that the big public guys will shop them out. This practice can only go on for so long until there are no contractors left to build and the only ones that remain you probably don’t want building your home where your family sleeps. So when my buyers ask me if we have hit bottom I let them know that we are currently below bottom in order to sustain a healthy housing market. Enough with the bandaids and bailouts and lets get back to work with respectable wages.

  28. Lou Corte

    This may be a duplication of my comments. I haven’t seen my previous response posted, so I presume there may have been an error in my attempt to communicate.

    I wholeheartedly agree that the Real estate Industry is key to our Nations economic and unemployment problems. I have sent the message printed below to U.S. Senator from Texas, John Cornyn and to our local board. So far, all that I have received in response is a “thanks” for the communication and “well check it out”.

    Will somebody tell me if this will or will not work? Sounds too simple and inexpensive doesn’t it? Sometimes “we can’t see the forest for the trees”. Please don’t be embarrassed to tell me if I’m wrong or misguided. I’ve been there before. I can tolerate “rejection” but can’t handle being ignored. Thanks.

    See my proposal to Senator Cornyn and Houston Association below.

    Respectfully submitted,
    Lou Corte, Broker, Great State of Texas

    (memo to H.A.R.)
    In regards to the Fannie Mae and Freddie Mac dilema and in response to the current economy and the Real Estate industry effect on same, the following letter was sent to Senator Cornyn and also to our local Board. Both responses were basically acknowledgements and nothing more.

    Maybe you can massage this and see if my suggestion has merit and if so, do something with it. I’d like to have someone tell me to shut up or help present it to the people that can promote it. Thanks.

    Original Message—–
    Date: Fri, 15 Oct 2010 15:19:38 -0400 (EDT)
    From: donotreply@cornyn.senate.gov
    To: corterlty@aol.com
    Subject: Your Message To Senator Cornyn

    Dear Louis Corte,

    Thank you for contacting my offices. Your correspondence has been received, and we will respond to you as quickly as possible. A copy of your message is attached below for your records.

    If you need immediate assistance regarding an urgent problem you are experiencing with the federal government, visit the “Help With Federal Agencies” section of the website for details on how to proceed so that your difficulties are brought to my attention as soon as possible.

    If you are seeking information or services from my offices that are NOT related to my Legislative duties, please visit my “Services For Texans” section for more information.

    Warmest Regards,
    U.S. Senator John Cornyn

    —————————————————
    Name/Email:
    Louis Corte (corterlty@aol.com)

    Street Address:
    6061 Broadway, P.O. Box 854
    Pearland, TX
    77581

    Phone:
    281-485-4336

    Your Message:

    Our Government keeps trying to develop solutions to the weak economy by throwing in these costly “stimulus packages”, which have not solved the problem but continues to increase our National Debt. A good part of our “jobs” problem, along with the housing crisis can be fixed, quickly and inexpensively. The Housing industry affects a large portion of our jobs market, the construction industry, plus suppliers of home furnishings, Insurance Companies, Title Companies, Mortgage Companies, land development, ie engineering, street paving, utility construction, plus thousands of Realtors and their employees across the Nation. The Housing Industry is suffering from a glut of foreclosures, created by Buyer’s over buying and housing being over priced. Those owners who can not sell their house, because of the depressed market coul be helped substantially, if their house notes were reduced by re financ-ing their home and extending the amortization period by 10 to 15 years. In many cases, their interest rates would also be reduced, thereby making their house notes even more affordable. Eventually they may have an opportunity to sell later at a profit, once the market improves and appreciation is more likely. The interest rates charged could be a point or two higher from the prevailing rate, to make these loans more attractive to the secondary lending market. This could also be a boost to Fannie Mae and Freddie Mac. All of this can be done swiftly, effectively and with no expense to our Government. For those poor souls who are facing foreclosure would also have a chance to avoid that if this arrangement was made for prospective Buyers to better qualify them to purchase a home that was not previously affordable. Let’s not forget the assistance this would also be for our Banks and Mortgage Companies. Thank you for your time and understanding. I FORESEE THIS AS THE MOST EXPEDITIOUS REMEDY TO OUR PROBLEM. I’m at your service if I may be of service.

    —–Original Message—–
    From: HAR Communications
    To: Louis
    Sent: Mon, Feb 7, 2011 4:51 pm
    Subject: The Edge: Proposed Reform for Fannie and Freddie, City of Houston Public Budget Meetings, Weekly HAR Market Stat and More

  29. Mike Connors

    No, no, no. Your positions are all wrong.

    Sure housing is important to our economy, its recovery, and its long term health, but that’s true of healthcare, and auto, and ag, and education, and a hundred other industries out there.

    Govt’s role is not to put its thumb on the scale in favor of the powerful or the select few. It’s job is to establish the rule of law and to protect property rights and then get out of the way as the people figure out how to produce the goods and services they need and how to divide up their income in a way that best satisfies their needs.

    Govt interferences just screws up this process. How is it fair that we subsidize my customers just because I’m in real estate? It’s not. Don’t subsidize me. Don’t subsidize my customers. Don’t subsidize any one (except the poor).

    We’ll do a fine job of figuring out how much housing we need and on what terms we can borrow without the mortgage interest deduction or loans backed by the federal govt.

    Unfortunately, in large part because of bad govt policies, there is a big overhang of housing demand, and it’s going to take a long and painful time to work through it.

    Mike

  30. Jason Gault

    This is exactly why I am disgusted that my local board membership is predicated on making an involuntary payment to NAR. I have never been, nor am I now a proponent of government involvement in the housing industry. The incestuous relationship between the major financial houses, Fannie and Freddie, the FED and congress (and their lobby groups) fueled the housing bubble. You cannot cure this problem by re-arranging the furniture Washington. As independent contractors (at least here in Michigan) I cannot fathom how any real estate broker or agent could support the policies put forth in this blog article.

    The financial and banking industry is one of the most regulated and overseen industries in America (others include Medical Care, the Airline Industry and Amtrak). Logic would argue that additional oversight and control to the home ownership process would net similar results as we have seen in airline travel for example. Continuing down the path we a presently pursuing creates only the perception of home-ownership, but in reality creates only debt-ownership.

    Financial habits are called habits for a reason, they are repeated behaviors that shape over long periods of time. The recent bubble demonstrates that taking on a large debt creates a large responsibility, and without proper prior planning, putting a person not ready to accept that responsibility in that position creates an untenable situation and often dooms them to failure. How many people could have been positioned for a traditional purchase with a little planning and work are now financially devastated as the result of a NINJA loan that was indirectly underwritten and had an implied guaranty from Fannie or Freddie.

    I am not happy that some of my annual dues have gone to support the position in the above blog and somehow it is implied that it reflects my personal views. I have a contrasting view point, and wish I had a voice in shaping the policy position put forth by NAR, but alas, I do not.

    I continue to work to educate my clients on not becoming a victim of the perpetual debt cycle. These policies unfortunately promote a short term fix for a long term cultural problem, and in the end, in my humble opinion, only serve to perpetuate the underlying causes.

  31. Shannon Jernigan

    Congress & the White House only have a one-track mindset when it comes to the economy. They only think of ways to increase taxes on homeowners and all other taxpayers. What will turn this country’s economy around is to ge back to the beginning of the Industrial Revolution where we manufactured most of the world’s products. Bring the companies back to operate in this country and tax the heck out of those who move them to another country, Stop Importing goods that are or can be manufactured in this country. Shut the door to illegal immigration. Hire and promote America. Then this country will have more housing, more money to spend, and less credit card debt. Congress needs to remember who they work for. The citizens of the USA. They need to think about eliminating all of the “Pork Barrel” add-ons to all of the bills that are sent for vote. Cut out the Partisan stances and remember that ALL of the people of the USA are the ones who put them in office and to look at the requirements of their job is to promote the wellness, safety and security of this country. They need to quit the POWER Struggle to control and be trully BI-PARTISAN.

  32. Just making a few short points – everyone of them could be it’s own blog post (and I/We probably should do that)…

    (1) Many Small business start-ups use home equity to launch – and most people don’t have a whole lot of equity (if any) right now. This directly impacts the number of NEW small businesses and the ability for an existing business to expand.

    (2) Many small businesses start in the home – if ‘m months behind on the mortgage and worried about packing/moving and where I’ll live – becoming an entrepreneur is low on the list of priorities.

    (2) Chicken or the egg – you can’t fix housing without fixing the economy AND you can’t fix the economy without fixing housing. – it needs to be comprehensive not piecemeal.

    (4) Fannie & Freddie – we need to keep them. Markets can not function w/o them – pooling is the only way for the market to work efficiently – imagine trying to sell ONE MORTGAGE at a time to keep the cash flow going.. Stringent standards for the mortgages that go into the pools is a much better idea.

    (5) Tax foreclosure profits – this will force the banks to work with the homeowner rather than pay tax on their profits (and there are huge profits – look at the banks’ balance sheets, dividends and earnings). They write the loss off in full on one side and and don’t pay tax on the other side. They might be much more willing to work with the homeowner if it affects their bottom line.

    (6) Form a REIT, the banks transfer their foreclosed properties to the REIT and these are then rented out and professionally managed. Puts these homes back into the housing market allowing people to be able to save to purchase a home while renting (high rents limit one’s ability to save).

  33. William Comer

    Allan Schwartz has it right. The government needs to stay out of it and let the free market work.

    The NAR is clueless and wants to participate in corporate welfare, sad.

    Who is John Galt?

  34. Willa Dailey

    I’m afraid the NAR is trying to straddle the fence on this issue. So long as our Government continues to struggle with the proverbial “chicken & egg” question when it comes to our Nation’s economy, (does home ownership create jobs or do jobs create home ownership) we will be perpetually relegated to creating short sighted fixes after each political election cycle. So long as NAR leadership continues to enable this vicious cycle, those of us with boots on the ground as Agents and Brokers will be left with an ever looming uncertainty about the future of our chosen profession and unable to set long-term goals for ourselves and our families. I started selling real estate in 1976 and have seen the best and worst of markets. Working on straight commission carries enough uncertainty by its very nature. We need our Association to take bolder strides in looking at solutions that will create stability in the housing market in the distant, as well as the near future so that Agent and Broker members will also be able to set long-term goals for ourselves.

    Home ownership (when touted as “The American Dream”) was never intended to be a quick turnaround cash cow for world market investment speculation, big bank profits, government manipulation of carrots and sticks to its citizens and all the other “feel good” entitlement programs the tax payers have been burdened by. The purchase of real estate is between a buyer, a seller and a bank. Period. It is not, and has never been, the Governments job to incentivize it. The rewards of home ownership are its own incentive, to be achieved through hard work, thrift and the desire to provide for ones’ own satisfaction and future security.

    Peter Drucker said: “The best way to predict the future is to create it.” It’s time we take bold steps to create that future for ourselves, existing homeowners and all those who dream of one day owning a home. It may mean swallowing some bitter pills in the process, but the free market, when left to its’ own devices, will reward the risk takers with the stability and security they ultimately seek.

  35. (1) Small businesses are the lifeblood of US economy and most small businesses get their start-up capitol with either a home equity loan of a loan using the home as collateral. Most people have very little equity in their home (if any!) – so this limits start-ups.

    (2) Most small businesses start in the home – not likely if the homeowner is facing foreclosure.

    (3) Chicken or the egg… you can’t fix housing unless you fix the economy and you can’t fix the economy w/o fixing housing – this can NOT be done piecemeal.

    (4)Fannie & Freddie – they have to stay and the gov’t can be the backer. There is no way to sell each and every individual mortgage on the secondary market – they have to be pooled. These sales are necessary to circulate money through the system.

    (5) The banks write off the foreclosure on one side of their book (in full) and then pay no corporate income tax on the sale of the property. TAX THE PROFITS – they will start working with homeowners when it is to their advantage to do so .

    (6) Create a REIT and place some of the foreclosed properties in it; then rent them out and have them professionally managed. This puts properties into the rental market – allowing the renter to be able to SAVE to buy a house – depleting inventory at a sane pace and not artificially with another credit

  36. With all due respect, I disagree with the NAR President’s position. Fannie and Freddie should not be backing loans as federal government entities. Their lax policies put the liability for home loans directly on the taxpayers, and because of this, allowed lenders to write sloppy loans. This cozy combination contributed to the housing melt down.

    Let Fannie and Freddie become private entities and compete with the other mortgage backers out there. Get government regulations out of the housing industry and let the free market prevail. Let future homeowners make a decent down payment of their own money so they have a stake in the house they are purchasing. Lenders make money off loans, and they will still lend money, but maybe they will scrutinize the buyer a little more knowing the taxpayers will not be picking up the tab if the loan fails.

    People will still buy homes even if they do not get the interest deduction. The nation is facing a huge debt right now, and everyone needs to understand that and face the reality that they will not be getting everything they used to get.

    The coming years will not be “business as usual” as the status quo can not be sustained. The average Realtor on the street knows this and hopefully the NAR knows this too. We will all survive in a free market, and probably do even better.

  37. Tonya Mitchell

    This is a good editoral, however, in a RECESSION, (I know that you may not want to call it that) but who has a median score of 720? Even those who once had good scores who now have lost there jobs for whatever reason but still trying to maintain do not have a median score of 720. Is anyone looking at the REAL picture. It is so fustrating to be that one person in real esate, the REALTORS, who have to deal with all of the issues that go along with homeownership, only to tell a person who pays bills on time, no foreclosures or bankruptcies, etc that there credit score is not a 680 let alone being a median 720. Tell me how is this going to happen.

  38. Brenda Feria

    With all of the money that every realtor has paid to NAR, I would think that there should be a bus to every major city in the US to speak with agents and consumers. Portland, Chicago and Denver? You need to make more stops and cover a lot more area.

  39. John

    I strongly object to NAR advocating anything that involves government attempting to influence the real estate market. Housing should not be viewed as the “engine” that will get us out of recession. We got into this mess with too many attempts at manipulation of the market, whether through interest rate adjustments, rules/regulation changes, setting up Fannie/Freddie/FHA etc and modifying their rules, etc. etc. etc.

    The real estate market should simply move only as a consequence of a change in incomes. The only reason a market should move up is because people are making more money and therefore choosing to spend more money. At the same time, if it’s moving down (as it continues to do today in my area) it is because people do not make enough money to justify paying current prices.

    The mortgage market likewise should be allowed to function as a free market. If interest rates go up, it should be because investors are demanding a higher return on their investment. If they go down, it should be because investors cannot find better options.

    The only thing the government has shown it can do well is to remove incentives to make wise decisions, and increase incentives to make bad decisions!

    NAR, are you looking out for the short-term interests of Realtors only, or are you interested in the long-term health of our economy? Look at historical trends–the market needs to continue to decline to return to where it should be! If you want to advocate on my behalf, encourage policies that support a free market and remove government intervention.

  40. I thing we are missing a major point here. We can get out of this housing mess in a relatively short period of time. 24 months. Mortgage Principal Reduction with Equity Share progams. Even with unemployment this high, it is very dueable. Lenders are doing this already but to perfect strangers, not the home owner. It is called a “Short Sale”. Join our Mortgage Principal Reduction National Rally, April 20, 2011

  41. Broken Window Fallacy. Phipps cites jobs created — itself a dubious claim — while making no mention of that jobs that are destroyed or never created in the process of stealing money from the people who earned it and passing it along to real estate brokers. In fact, the National Association of Realtors is the sine qua non cause of the Great Recessions, single-handledly destroying at least six trillion dollars of real wealth. The NAR is the best-enemy of private property America has ever known.

    Ron Phipps: Are you a clueless dupe or a knowing villain? If you don’t want to be an agent of evil, come talk to us at BloodhoundBlog.com. We can show you how the NAR can become a force for good in the American economy.

  42. Wendy McClure

    I do agree that Housing is the most crucial American Dream…and Everything derives from housing. If you own a home, you will purchase many things to go into the home – thus supporting our economy and stores in so many ways – premote spending and sales of each and every item out there in our universe today. Businesses picking up and not closing their doors, and the need to hire employees – JOBS promotion.

    I think we need to do more then those three things. Our government has to know that these financial institutions are taking advantage of the Americans and forcing them out of their homes to collect OUR tax payer dollars for their deficiencies, along with their insurance monies and then they sell them at VERY low prices. All departments of financial institutions should be able to use the ONE loan number and know everything that is happening with that particular loan.

    The need to comprehend our state laws and just use common sense. All I am searching for is Common Sense on the part of ALL fiancial institutions and our Government does not comprehend at all whats really happening out there in the REAL world.

    We need to STAND TOGETHER as Americans and fight for our rights – especially owning a home and being able to retain it and live happily…for our futures and children!!

  43. Wow, this post is getting a lot of play! I think it may be appropriate to back some of the claims with references to support them. I’d hate to have people think Realtors all just drink cool-aid and never use our critical thinking skills.

    I’m not overly concerned about the mortgage tax deduction or a credit score “adjustment”; although I think there are strong arguments for both; but without question the Federal Government needs to continue backing the mortgage market as part of the GSE Reform!!

    With out the federal government’s backing we would see (at max) 10 year mortgage terms at 15% rates (if not higher). It would be housing armageddon!

    Haha. OK, it would be real bad, maybe not armageddon. ;-)

  44. Thanks for the comments. I do agree home ownership and the American Dream of owning your own home is important in helping to sustain the economy. As long as the home ownership is based on real life present day scenarios. Getting approved on a home loan needs to be based on today and not the possibility of tomorrow. Make the dream achievable for today so if the rug gets pulled out from under you – you are able to survive and do not have to experience the humiliation of foreclose. The only way that will happen, because of human nature, is we need to continue to have regulation to bring the pendulum back to reality not pie in the sky. We saw what no regulation did to our economy – a total shell game!

  45. Carl Radon

    Glad to see there are still a few free-market Realtors left. You’d think there would be more, seeing that this most recent mess started a long time ago with politicians and power-brokers manipulating the market for their own gain or reelection. And what made that possible was the GSEs. Privatize Fannie and Freddie; If they can’t run an honest, proper, profitable business, then they should fail and disappear. And as for HUD, defund it and save us all a lot of tax money and grief.

  46. There is no way this statement is true:

    • For every 1,000 homes sales there are 500 jobs added to the economy.

    Last year more than 4,000,000 homes were sold. That would mean 4,000 x 500 jugs were added because of home sales. That would be 2000000 jobs or almost 200000 per month.

    Unless ” the economy ” means the global economy…… Even half these numbers and there seems no evidence for such statements….

    Am I missing something?

  47. Per one of the previous comments posted – “This is really simple. Stop borrowing money. Save and pay cash for your house. Leave the banks out of the housing industry. They don’t care about you…:”

    I don’t know of many people who can pay cash for their homes. If it wasn’t for lending companies the American dream would remain a dream. Maybe if the market dipped down low enough then we could all pay cash but then that has it drawbacks as well

  48. Long term resolutions to the current distressed financial markets entail staying to the basic practices of good underwriting standards, amending current appraisal laws to give credit for improvements, and borrowers’ reasonable savings rates.

    No matter what legislation is passed regarding the future of the Government Service Enterprises (GSEs) and private financial institutions, successful lending practices depend on the borrower’s ability and responsibility to repay any loan. Federal Reserve and private bank officers commented with great concerns in 1998 regarding the 1996 financing act that lowered the underwriting standards on loans the GSEs were required to purchase.

    Unfortunately in response to much financial fraud, particularly in New York and New Jersey the resulting Home Valuation Code of Conduct led to artificially devaluing properties with legitimate upgrades. This legislation needs immediate change if residential and commercial properties are to be refinanced, built, or remodeled with new energy efficiency features. Otherwise, such efforts will be futile.

    In the Las Vegas market better performing loans underwritten since January 2008 resulted from lower pricing that enabled qualifed borrowers with a good savings history to finally purchase homes that met their needs. Many examples include couples with children who were able to move out of a one bedroom apartment into single family homes. A client and father of three daughters worked overtime to pay off some debts and build up a down payment for a great single family home.

    In conclusion, attendance the past four years at NAR Conventions reveals our lobbyists are utilizing their political credit as well as possible in addressing critical issues that take time to resolve. As President of the Greater Las Vegas Association of Realtors I am encouraging our members to take advantage of the NAR web site for updates and attend the conventions whenever possible.

  49. A strong housing market is crucial to our economy turning around but we can’t go back to giving away homes to anyone who asks – sub-prime lending is big reason why we are in this recession.

  50. Donna Davis

    The MID is a joke. What we need is THE FAIR TAX!! Get rid of the income tax & replace it with a consumption tax. (Every body pays based on consumption) By eliminating corporate taxes, you would see tons of new businesses coming to this country. This plan would help to create jobs & working people need homes (one they can pay for). If NAR realty wants to support Realtors, I expect them to be in Washington promoting the Fair Tax, (HR 25 I think)

ADD YOUR COMMENT