Real Estate Market Crisis Solutions: The GSE White Papers
This article highlights the issues described in the GSE White Papers and provides comments.
The White Papers focus on the problems with Fanny Mae, Freddy Mac and the housing market. It is written in an easy to understand style for anyone with a basic knowledge of the real estate market.
Congress members have complained about the lack of detail in the White Papers. However, it is clearly stated in the introduction that the papers contain goals and options; not a complete piece of legislation. The introduction outlines the intent of the Federal Reserve to work with others to generate a solution to the current financial problems faced by the real estate market.
The first part of the White Pages focuses on the causes of the current recession citing the outdated regulations and the lack of capital to back the risks lenders, including Fanny Mae and Freddy Mac, were assuming. If the reader desires a clear objective analysis of what brought down the real estate market and the finance market, the White Papers is an excellent document to read.
The Republicans will object to the provisions for housing for low income families and the provisions for helping lower income families obtain affordable mortgages. They probably will also object to consumer protection. They will want a quicker liquidation of Fannie Mae and Freddie Mac.
The Republicans will criticize the White Papers as promoting big government and creating additional expenditures and over regulating the real estate market. They will object to any additional fees, lenders will require. But the reality is that the document supports returning the real estate market to the private sector and reserving government intrusion for periods of real estate market crisis only.
The Republicans are determined to slash government agencies and regulations without regard to the effects on the economy thereby driving our economy a deeper recession.
The document talks about reducing tax payers risks in specific scenarios. This part will be supported by the Republicans who might seek to reduce the government's role in the mortgage market to dangerously low levels wherein the government will be unable to respond to the next housing crisis.
There are dangers at both extremes of the spectrum of possibilities for preventing another financial crisis and reducing the taxpayer's burden in that crisis. The new legislation must be bipartisan in nature and must not initiate quick actions that the market will be unable to adjust to.
The White Papers offer many options and leave the final form of the legislation in the hands of Congress -- where it should be.
Reference Geithner's GSE White Papers at:
http://www.scribd.com/doc/48640126/reforming-americas-housing-finance-market
Published by John Mario
As a child, I wrote short stories and read them to my friends. I studied interior house wiring in a vocational high school. I majored in electrical engineering in college. I worked for 8 years as an electon... View profile
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4 Comments
Post a Commentmarket value ONLY IF the current owner agrees not to sell the property within five years. The new loan would be contingent on current owner agreeing to pay the original mortgage in full to the company if the owner sells the house prior to the five year period ending.
Current owners must meet the following criteria to be eligible:
Must be their primary residence
Must have purchased the property after 2002
Must not have refinanced for a higher amount of their original mortgage
Must have had a hardship such as loss of income, illness, spouse deceased, etc.
Must be able to qualify under current mortgage company guidelines
Mortgage companies would be receiving the same amount in monthly payments from the current owner as they would from a new buyer – what’s the difference who makes the payments? The property is going to be sold for a reduced price anyway, so why not “sell†it to the current owner if they can afford the new payments based on current value. Furth
market value ONLY IF the current owner agrees not to sell the property within five years. The new loan would be contingent on current owner agreeing to pay the original mortgage in full to the company if the owner sells the house prior to the five year period ending.
Current owners must meet the following criteria to be eligible:
Must be their primary residence
Must have purchased the property after 2002
Must not have refinanced for a higher amount of their original mortgage
Must have had a hardship such as loss of income, illness, spouse deceased, etc.
Must be able to qualify under current mortgage company guidelines
Mortgage companies would be receiving the same amount in monthly payments from the current owner as they would from a new buyer – what’s the difference who makes the payments? The property is going to be sold for a reduced price anyway, so why not “sell†it to the current owner if they can afford the new payments based on current value. Furth
Solving the Real Estate Crisis
The Facts: Many real estate loans that were granted to those who bought houses in the United States since 2002 are being wiped off the books, as many of these homes are being foreclosed upon, or the mortgage company is allowing the home owner to enter into a short sale, which also wipes the loan off the books. Every time a house is sold in a distressed circumstance, we are not only punishing the owner of the house, but we are also punishing the economy of the United States.
The Problem:
Homes are being sold after foreclosure or short sale far below actual market value. These homes are flooding the market, which has been driving down market value of surrounding properties for the past five years.
The Solution:
“Sell†the house to the current owner at current market value instead of placing the property into foreclosure, or selling the home as a “short saleâ€.
Erase the original mortgage and start a new mortgage at the current
well defended article