The Obama administration is gathering public opinion on how to improve the housing finance system, including the operations of Fannie Mae and Freddie Mac and the federal government’s role in the system.
The Treasury Department released questions last week seeking comment from the public, including market participants, industry groups, academic experts, and consumer and community organizations, in order to achieve a "stronger," "more stable and sound" housing finance system.
Participants can respond to the seven questions online at regulations.gov and at a series of public forums to be held nationwide. The details about these forums haven’t yet been announced.
Inman News asked real estate professionals to weigh in on some of these questions posed in the Treasury Department announcement. Other questions will be addressed in future articles.
Question: How should federal housing finance objectives be prioritized in the context of the broader objectives of housing policy?
Steve Wiley
Broker-owner
Smarter Choice Real Estate
Lincoln, Neb.
First, let’s figure out the proper balance point between a smart target for homeownership and the risks to owners, banks, investors and taxpayers of over-encouraging and over-incentivizing renters to become owners. Homeownership is great, but it is not for everyone, especially when the mix of cost, finance and tax support is beyond reasonable.
I believe that the role of government is to encourage housing ownership by taking reasonably calculated steps to keep (a) housing affordability index at (a specified level) for sustained periods. Most attempts to intervene on the dynamics of the free markets and competition have, at best, positive short-term impacts, but not more, and sometimes unintended consequences later.
An example of the doctrine of unintended consequences resulting from uber-government intervention is the Clinton-era housing (Federal National Mortgage Association, aka "Fannie Mae") policy, which boosted homeownership to a historical high point.
But, (it) also ultimately lead to toxic mortgages that foreclosed, displaced many homeowners, caused those prior owners and their mortgage investors more financial harm than good, and flooded the market with foreclosures, which further exacerbated the housing bubble’s collapse.
Judson Voss
President
Roxx Productions LLC
Mooresville, N.C.
I believe at the forefront of policy should be an effort to stabilize the housing market. In my opinion, the best way to do this is to have a blended policy with an eye towards affordable housing, for those who qualify, to create ownership opportunities in fragile neighborhoods.
At the same time, the administration needs to realize that real estate investors are an integral part to stabilizing neighborhoods — either by them purchasing and repairing homes to retail or purchasing homes to rent, thus reducing the glut of vacant homes in many areas.
Pamela Dela Cruz
Broker-owner
Pamela Dela Cruz & Associates LLC
Walnut Creek, Calif.
To sustain homeownership, the Home Affordable Modification Program (HAMP) has been created to help current owners … modify their loans. If that has been denied, the Home Affordable Foreclosure Alternatives (HAFA), which started in April 2010, (is available) should the homeowner choose a short sale or deed in lieu of foreclosure.
For several years, the short-sale process was avoided by Realtors, but now, since this program has been created for Fannie Mae and Freddie Mac loans, the process will be much quicker, offering monetary incentives for homeowners to move (and) for short-sale processors to receive cash incentives.
(The program) also states the borrowers will be released from liability, including deficiency.
James Crumbaugh III
CEO
Allison James Estates and Homes
Lake Suzy, Fla.
I have been in this industry for almost 40 years. Until just a few short years ago, we used front-end and back-end ratios for securing a home loan. This system worked well for decades. The simple answer to this question is to go back to the sound lending practices of the past.
While I agree that it’s a noble goal for all Americans to own a home, in reality that just doesn’t work. There is (a percentage) of our population (who), if you gave them exactly the amount it would take each month to pay all their bills and feed their families, would still not make their payments.
Then there are those who don’t care to own, or move often enough that they don’t care to own. So, the reality is that we as a nation should be satisfied with 70 percent to 75 percent homeownership.
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