Update: And make sure you read this. If the financial raping and pillaging of the American people doesn't inspire you to revolution, nothing will.* * *
First the National Association of Realtors (NAR) pushed for exotic loans to keep prices rising. Then they redefined the way affordability is calculated so that housing looks more affordable than it really is. Then they demanded that the Fed lower interest rates. Then they backed the asinine Bush housing bail-out proposal. And now they are pushing for raising Freddie Mac's and Fannie Mae's portfolio caps:After working overtime to initiate Bush's preposterous mortgage bailout, the NAR (National Association of Realtors) asked themselves what else they could do to artificially prop up overblown home prices. And then it hit them: why not ask the OFHEO (Office of Federal Housing Enterprise Oversight) to increase portfolio caps for Freddie Mac and Fannie Mae.Although not unexpected, it still sickens me nonetheless. When will We The People take back America from special interests?
Under current caps, Freddie and Fannie can only buy mortgages valued at less than $417,000. Proposals are floating around to increase the size of the mortgages the two companies are allowed to buy and sell. Freddie and Fannie each hold more than $700 billion worth of mortgages in their respective investment portfolios already. The new proposals would allow the companies to expand their portfolios to dangerous proportions.
...In our demoralized world, we allow real estate agents to push a personal profit agenda and influence the decisions of policymakers. The NAR is not a trusted authority on banking and risk, yet they are allowed to personally address and pressure Congress and the Director of the OFHEO.
Does anyone else see something wrong with this picture?!
Write to your representatives. Get out on the street and make some noise.
4 comments:
It sickens me as well Marinite... especially the fact that this whole thing is sold as a bill of goods to help out the little guy.. what a crock of BS...
I will write Washington on this one... thanks for the prompt..
I wish I were in Washington right now, because I'd be pushing to lower these limits not raise them. Want to help out the little guy Congressman Frank ? Do everything possible legislatively to lower housing prices... Not very hard. Whether Congress acts on this bill or not, housing prices will eventually collapse due to the mathematics involved... the CAR and NAR and whomever can kick and scream all they want, but math is math... so sorry..
The GSE loans do have stricter standards, so even if they raise the limit, some (or maybe even most) won't qualify. Minimum downpayment, I believe it's 3% but they could raise that for a larger loan, solid FICO AND....here's the kicker....rules on income to debt ratio. So, no Marin POS if it eats up 50% of your take home pay.
As annoying as all this talk is, remind yourself that it was non-existent lending standards that got us into this mess. The minute you start imposing standards of any kind, marginal buyers get knocked off. Inventory for sale is at record highs, so it won't be enough to prop up the market.
If the news gets worse over the next few months, I think the psychology will start to shift against RE....gee, market corrections aren't just 6 months....gee, you can't sell a house whenever you decide you want to....gee, that's a lot of money when there's no guarantee you'll turn a profit....gee, I know people who are losing their RE-related jobs and losing their houses.
Remember there's an election next year, so we're gonna hear a lot of hot air from both sides.
Just look at how sales have fallen off the cliff in Marin....even for all the talk we hear about how wealthy everyone is and un-touched by interest rates and lending standards and blah, blah, blah.
BTW, the Marin Heat Index is 0.32 today.
If Marin is so special that it defies the laws of basic economics, I don't think home sales would be in the toilet to this extent.
Also, I've been meaning to post on this for a while....someone said the Heat Index should be the San Rafael & Novato index because they make up about 50% of the inventory for sale, and that's true. However, these less expensive, "less special" towns may be where first time buyers enter the market. And without them, there's no trade up market to Southern or Central Marin, and no trade down to retire elsewhere.
"why not ask...to increase portfolio caps for Freddie Mac and Fannie Mae."
What a bit of tragicomedy! They won't be able to spin this fiasco to retain earnings atthe peak...don't they get it? The NAR is for some rough (and well-deserved) times. I hope they face government scrutiny--and future competition.
"...these less expensive, "less special" towns"
...but they also comprise the majority of Marin's population and sales. While the people of Ross, Kentfield, and Bel-Tib may think they represent Marin, they're actually a small minority. Combining the 2006 populations of Sausalito, Mill Valley, Bel-Tib, and Kentfield comes to just 70% of San Rafael's 2006 figure (~56,000).
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