It looks like a federal bailout of mortgage backers Freddie Mac and Fannie Mae may happen as early as today. “It could cost taxpayers billions.” It is reported that a million more houses will enter foreclosure in 2008 compared t 2007. Freddie and Fannie back more than half of the country’s mortgages.
I don’t see that there are any winners here. Maybe a few “I told you so”s.
The most prominent change we’ve seen in real estate when working with buyers is that mortgages are harder to get (and that the rules are constantly changing and you have to meet the latest standard, not the standard that you applied under). Obviously the stricter lending rules came once the horse was out of the barn. But will a loan made today prevent a repeat of what is going on now? Are today’s loans “good” loans for banks to be making or will we see another round of reform? Tougher scrutiny shrinks the qualified buyer pool adding to the vicious cycle of making it harder to sell a home. How close we are to the bottom of the market depends largely on how lending shakes out.
If our taxpayer dollars are going to pay towards the solution, is there a viable system for keeping some of these homes out of foreclosure in the first place? I’m against handouts but I’m also against ignoring the possibility of spending some money to save even more.
They need to set a national standard for mortgage brokers. At least something as challenging as a series 7 exam, and I would applaud something more in line with the difficulty of the Uniform CPA exam. Same goes for real estate “brokers”.
Its time to clean house, this is the last straw. This country needs to rid the real estate industry of all the hack, looser, wanna-be, uneducated, unscrupulus, greedy, vacant sychophants that attatch themselves to the process of buying and selling real estate at the expense of consumers. Technology has changed the financial system in way that makes it very dangergous to contiue doing business the way we do now. Twenty years ago agents did create a more fluid agile market than you would have had without them. Thats not the case now. Now they are a barrier to a healthy fuctioning market.
The vast majority of real estate agents couldn’t make anywhere near the money they make doing anything else. I would say its a safe guess that most of them would be in retail or service jobs if they didn’t do what they do now. Theres no other well paying proffession where you can say that about the people who practice it. You don’t ever hear the story: “Ya, four months ago I was working at an Eddie Bauer downtown, and now I’m a lawyer!”. The fact that you could change lawyer to mortgage banker in that sentance and make it totally believable is very disturbing.
I do want to challenge the assertion Charles made that there are no winners in this. Every dues paying member of the NAR won’t being returning any of the truck load of money they made between 2005 and 2007. They are winners.
Don’t be silly! Of course there were winners! I mean, you have lots of property and a couple nice vehicles. Maybe even made enough to pay for the kids’ college.
The mortgage industry were winners too. As was Wall Street. Lots of people- flippers, sellers, developers (particularly in Portland where PDC hands money to Homer and Gerding like Halloween candy), all winners. Sure, they’re organizations may be failing, but the individuals who participated in this ponzi scheme still have their cash and toys. I’ll bet the two crooks that ran Fannie & Freddie got very nice severance for their service that involved overseeing the repossession of 50% of the mortgage debt in the country.
But I know. You were just doing your job.
If I was emperor, I would confiscate every cent from anyone connected to real estate since 2000. All of it.
“How close we are to the bottom of the market depends largely on how lending shakes out.”
If this isn’t bubble mentality, then what is? It’s as if the lenders should shake their big ‘cash shakers’ (probably looks like a salt shaker, but has green inside). A little green for you means much more green for us… Just like salt makes everything taste better, so does the green shaker, and you can never use too much.
Call it what you want but the housing market is dependent on lending.
Who wins? PIMCO! Bill Gross bet a ton of money that the fed would rescue FNM & FRE bonds. Us little taxpayers can sleep well tonight knowing Bill Gross earned a couple million dollars at our expense. Go Bush/Paulson/Bernanke!
“Tougher scrutiny shrinks the qualified buyer pool adding to the vicious cycle of making it harder to sell a home.”
Tougher scrutiny is what’s going to make it possible for anyone to ever sell a mortgage backed security for more that 30 cents on the dollar in this country. It’s whats going to allow us to have a secondary mortgage market. It doesn’t shrink the pool of buyer’s, because a large percentage of the people who were put in homes the last three years weren’t “buyers” they were foreclosures that needed a year or so to rippen. Not letting people get no doc interest only loans using piggy back second mortgages for their down payment isn’t adding to the vicious cycle of home price declines, its saving us from utter chaos and financial melt down. It does cut down on the pool of dimwits that can be manipulated into properties they can’t afford though, but does the real estate industry really want to continue to profit from them?
Sadly, Freddie and Fannie had to be rescued. But tougher loan requirements and a more thorough review of loan applications are not a bad result of the past few years of re greed and downfall. Mr. Thrifty is dead on with his thoughts about ‘buyers’ using no-doc loans and the pending repercussions. I don’t recall hearing of a god given right to home ownership. Maybe a left side of the aisle belief that everyone should own their own home?
An increase in testing and entrance barriers for a re or mortgage license are definitely needed. No grandfathering of licenses allowed.
Left side of the aisle? I believe it was the right side and their materialism-driven “ownership society” that is to blame for the superficial cheating culture we’ve allowed them to create.
Left, right, doesn’t matter. FNM/FRE handed out millions to both parties. R’s held Congress while Clinton was in office, but Raines et al at FNM/FRE committed fraud unchecked. Bush never did a thing to reign in FNM/FRE, and of course Schumer and Frank (both D’s, obviously) were FNM/FRE enablers. OFHEO never had the necessary power to regulate. We also see FDIC, SEC and others asleep at the switch. Plenty of blame to go around. And then there is the Fed…..
Plenty of blame to go around my ass. This economic debacle comes after 30 years of republican dominance and the implementation of conservative fiscal policies.
But be my guest. Continue to support republicans. When you’re living in a tent perhaps you’ll get a clue.
Odd. Seems like you left out 1993-2001. I thought the Executive Branch could appoint Federal Reserve Chairmen, as well as controlling OFHEO and Depts of Commerce and Treasury. Glass-Steagall was repealed in 1999 — which of course allowed the stupid bank involvement in swaps, etc., that they should never have been involved in.
Today we see who drives the Senate, who just approved Paulson’s bazooka that he promised he would never use. Well, that turned out great, didn’t it?
R vs D is a stupid thing to be arguing — just look at how FNM/FRE spent their lobbying dollars.