On the surface, it is easy to look at the real estate foreclosure crisis and blame everything on the banks. While there is no denying that these financial institutions have been a large part of the problem, there are other sides of the story.
For example, those who have foreclosed on their property have to take some responsibility. Maybe these people shouldn’t have been granted a mortgage for their home, however, it doesn’t give them the right to “take the easy way out.”
While the real estate market is still looking to recover across many regions in the United States, it is important to note that things are looking up. This is good news for an industry that has faced a lot of uncertainty over the past few years.
With this in mind, politics are beginning to play a bigger part when it comes to the real estate market, and foreclosures in particular.
There is no doubt that nobody wants to face another housing crisis. That being said, having “too many cooks in the kitchen” is never a good idea.
The question to answer is this: can politicians have a positive impact on the industry, while helping decrease foreclosures, or will too much meddling bring more harm than good?
For a better idea of the political influence and what lawmakers are hoping to accomplish, we don’t have to look any further than recent developments in multiple states throughout the country.
To get started, let’s take a closer look at this MLive.com article.
No matter where you live, it is safe to say that the title of this article doesn’t give you a warm and fuzzy feeling inside. And if you live in the state of Michigan, it may be downright scary.
Here is an excerpt from the piece, giving an idea of what is going on in Michigan:
“The Senate Banking and Financial Institutions Committee on Thursday approved a four-bill package, introduced one day earlier by a group of Republican lawmakers, that would extend a pre-foreclosure negotiation period allowing residents to seek loan modifications but shorten a post-foreclosure redemption window allowing them to retain or short sell their homes.”
As you can see, this is a win-lose situation. On one side of things, the bill package would give those facing pre-foreclosure more time to seek a loan modification. This could potentially work in the favor of these people, giving them the time they need to change their loan as a means of staying in their home.
Unfortunately, there is a downside to the bill. It would short the amount of time the homeowner has to retain or short sell their home.
Michigan is not the only state that is dealing with the intermingling of real estate foreclosures and politics.
Let’s go all the way out to the west coast with this article from KATU. Here is an excerpt explaining where things are headed in this state:
“The Oregon House has voted to extend a requirement that some mortgage lenders meet with struggling borrowers and a professional mediator before initiating foreclosure proceedings.”
This is a more positive agreement than the one being worked on in Michigan. With this vote, it is the hopes of the state that mediation will make it easier for borrowers to keep their home as opposed to letting it slip into foreclosure.
Placing the blame for the housing crisis on one group is easy to do. Of course, it is also unfair.
Moving forward, everybody needs to work together, lenders and politicians included, to avoid a similar situation in the future.
Join the discussion Please be relevant and respectful.
Simon, given your background in real estate, what do you think of the connection of home prices and state fiscal health?
This is all planned and executed. This was done to crash the market and flood it with foreclosures so large developers can cash in on the rental business while retaining all those deeds. You dont think huge movements in industries like this aren't planned out and sponsered by big money buying your politicians? LOL, hilarious.
Look at whats going on in the rental industry right now, and the prices that are almost record highs. All of this is going to tie into the new flex loans the administration mandated be given out last year, as the end of the banks mortgage capitalization plans.
Government knew this would happen, and wanted it to happen. Economists and people like Ron Paul said it was going to happen for years. Hell the videos are still on youtube, from 2001... Everyone ignored that and continued as planned because hey.. "Even those who can't afford it should be able to own a home." ..The government knew those people would never be able to pay off those loans, but still forced the banks give them out on quotas, else they would pull their FDIC backing.. they even made sure the banks structured them to be adjustable rate, so "minorities" could qualify with low interest only payments and nothing down.. knowing they would default. The banks did wrong, but the government forced them, so who's fault is it really? Just another failed attempt at "forced equality" wealth distribution. Ironic they claim to wanna spread wealth around, and yet the federals continually consolidate it in their own bank accounts.
In my opinion there is a definite connection between foreclosures and fiscal health. Foreclosures represent a greater underlying problem. For many states, such as Michigan, foreclosures represent high unemployment and job loss. States that are plagued with higher than normal foreclosure averages need to look beyond the symptoms and address the root condition.
I do not believe that I would go so far as to say that the real estate market collapse was staged. The overall negative effects have outweighed the positive ones. Yes, governmental policies are to blame for much of the problem. As with many things, the Feds often look to fixing the problem in the here and now leaving the ramifications of their actions to future leaders. This shortsightedness, in my opinion, is what caused much of the housing crisis.
Now the big businesses that walked in and snapped up the dirt cheap real estate are more like vultures taking advantage of a prosperous investment opportunity rather than masterminds causing the collapse. On the flip side of the coin, if it wasn't for the bulk purchases of real estate, I do not believe the economy would have recovered with such speed.
If I understand you right, home prices and foreclosures are an indicator of economic health, which in turn leads to either favorable or unfavorable state level finances. Is that right? If so, would you recommend state government stimulus to improve a weak housing market?
You don't think it was constructed? Then how do you explain the current administration and the congressional representatives (who were all around when this started.. incumbents galore!) who sat in Congress and listened to Ron Paul talk for nearly 8 hours on multiple occaisions, about how the Fed is ropeadoping us, the current bond issue is going to cripple credit.. the housing market was gfoing to crash, due to the loan structures.. the hyperinflation that is coming due to our inept administration.. He spent hours discussing all of this with them and telling them to ACT NOW to avert crisis..... IN 2001! He wrote countless papers, even BOOKS on the issue. Have you read any of them? Do you have ANY idea how actions taken directly by your representatives led to this being exploited (and forced at that) by the banks? I didn't think so.
Hit up youtube, or Cspan.. Library of Congress has it recorded as well, where all of this was outlines and foretold almost a decade before it happened... and the congress brushed it off and said who cares. I wonder why.. Hm, maybe because.. THEY ARE THE ONES who implemented the plans and bills that caused the issue!! How can you say that it wasn't intentional when they constructed the mess, sat back and watched people for.. literally years.. preach to them on the floor about how their mess was going to wreck our economy, then when it happens, you absolve them of all liability because "hey, they say they are trying. I guess I'll just believe them!" No wonder our country is so screwed up, eh!?
Yes, I see the real estate market as being one indicator of economic health. Would I recommend state government stimulus to improve a weak housing market? It depends. The real estate market often regulates itself and is rarely constant. The problem with stimulus packages is that often they come too late, they help the wrong group and tend to over-stimulate the market. Once the market is racing too fast and creating above average price appreciation, then they struggle to slow it down.
I would rather recommend stimulus packages that address the underlying factor causing the real estate market swing. Focusing on improving unemployment, for example, improves the real estate market on several levels while building economic stability. Build up these and you build a stable base for a self-supporting real estate market.