Skip to comments.The Birth of the New Real Estate Market in the USA
Posted on 05/03/2013 8:55:15 AM PDT by Mr. Jeeves
Who is Ed DeMarco? What is the FHFA?
Even though it did not come entirely unexpected, the day has finally arrived. President Obama has decided to nominate Mel Watt instead of Ed DeMarco as the Director of the FHFA (Federal Housing Finance Administration).
Most people have never heard of the FHFA, nor Mr. DeMarco. Who cares? Why should one care? You should actually all care. The real estate market has officially entered a new chapter. Analysts, economists, investors and homeowners, throw away everything you thought you knew about real estate and start all over. I would like to get right to the point so if you do not know what the FHFA is, you can read about the agency here yourself. Ed DeMarco has been the acting director of the agency since 2009.
At issue is the write down of principal, which DeMarco refused to support. That is really not the point though. It is the role of government in housing. It is the writing down of principles.
The government has always had a hand in the real estate market, be it through Section 8, the FHA, mortgage interest deductions, renters tax credit, capital gains, etc. Up until September 2008, real estate financing has been supported by the two quasi government agencies Freddie Mac and Fannie Mae.
The termination of DeMarco's acting directorship is a formal declaration that real estate in the United States is now officially nationalized and socialized.
From this point forward:
- All real estate financing will be done through Freddie, Fannie, Ginnie or a new government bureaucracy to be created and named later.
- All interest rates will be determined by the Federal Reserve, which will be purchasing all loans.
- The government will determine what percentage of their income households should pay on their mortgages.
- Regarding point 3 above, the government can retroactively re-determine what households should pay, based on the direction of political wind.
- In the event home prices go down, debt will be forgiven.
- If the private sector wishes to compete with the government, there is the CFPB (consumer finance protection bureau) which will demonize you if anything goes wrong, and what "wrong" means will be defined at some future date.
- Housing, and more importantly, a mortgage, is now an entitlement, just like healthcare. How the country is going to pay for it will be, you guessed it, determined at some future date.
In closing, I wish I were really just being facetious, but unfortunately, I see the above as just the start of the new era.
Hope you don't think your house is an investment - for this appointment means the ultimate deflationary bottom is still far, far away.
Oh, perfect...and this from those friendly folks who run Amtrak and the Post Office.
Obama admn is doing the same thing that caused the bubble and the crash. Just to make it seem like the housing market has improved, but it is just the same game game all over again.
I guess they feel like a Republican will get elected in 2016, and then they can do to that Republican what they did to GW.
The more things change, the more they stay the same.
If the author is trying to say that Mel Watt is a nut case wild eyed liberal, he is on the money.
He has been a disgrace to North Carolina.
We are glad to get him out of NC, if only the house can hold him in check.
In the name of the general welfare, to protect the people's security, to achieve full equality and total stability, it is decreed for the duration of the national emergency that:
Point One. All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment, under penalty of a term in jail. The penalty shall be determined by the Unification Board, such Board to be appointed by the Bureau of Economic Planning and National Resources. All persons reaching the age of twenty-one shall report to the Unification Board, which shall assign them to where, in its opinion, their services will best serve the interests of the nation.
Point Two. All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit nor leave nor retire, nor close, sell or transfer their business, under penalty of the nationalization of their establishment and of any and all of their property.
Point Three. All patents and copyrights, pertaining to any devices, inventions, formulas, processes and works of any nature whatsoever, shall be turned over to the nation as a patriotic emergency gift by means of Gift Certificates to be signed voluntarily by the owners of all such patents and copyrights. The Unification Board shall then license the use of such patents and copyrights to all applicants, equally and without discrimination, for the purpose of eliminating monopolistic practices, discarding obsolete products and making the best available to the whole nation. No trademarks, brand names or copyrighted titles shall be used. Every formerly patented product shall be known by a new name and sold by all manufacturers under the same name, such name to be selected by the Unification Board. All private trademarks and brand names are hereby abolished.
Point Four. No new devices, inventions, products, or goods of any nature whatsoever, not now on the market, shall be produced, invented, manufactured or sold after the date of this directive. The Office of Patents and Copyrights is hereby suspended.
Point Five. Every establishment, concern, corporation or person engaged in production of any nature whatsoever shall henceforth produce the same amount of goods per year as it, they or he produced during the Basic Year, no more and no less. The year to be known as the Basic or Yardstick Year is to be the year ending on the date of this directive. Over or under production shall be fined, such fines to be determined by the Unification Board.
Point Six. Every person of any age, sex, class or income, shall henceforth spend the same amount of money on the purchase of goods per year as he or she spent during the Basic Year, no more and no less. Over or under purchasing shall be fined, such fines to be determined by the Unification Board.
Point Seven. All wages, prices, salaries, dividends, profits, interest rates and forms of income of any nature whatsoever, shall be frozen at their present figures, as of the date of this directive.
Point Eight. All cases arising from and rules not specifically provided for in this directive, shall be settled and determined by the Unification Board, whose decisions will be final.
Mr. Demarco saved the taxpayers billions. He should be praised.He refused to allow democrats write downs of mortgage balances. Now comes a complete hack and it will cost you, your children and their children billions.
Nothing is going to improve until the real unemployment rate is safely below 5%.
The numbers we see on TV are from cooked books.
There is only one number that counts and that is the number that you get when you subtract the number of persons holding jobs from the number of all persons under 65 who are physically and mentally able to work.
And to do that, you have to find out how many of the 8 million people on permanent disability are really disabled.
Also you have to look at how many of the employed are working at a job that is a full time job.
Actually the best number would be hours worked vs. 40 hour week times total number of people under 65 who should be working.
These are not the numbers we see on TV.
So my point is that anything the Marxists do to try to bring back the economy other than creating real jobs that add to the nation’s wealth will only result in either a bubble and/or a total financial crash.
Mel Watt is a horrible choice. I hope the few real Republicans we have will prevent Watt from destroying the real estate market.
Fine - I’ll save and save and save until I can pay cash at a much lower price then if I could finance.
I’m not totally clear on the details of this story, but from my perspective it may not be relevant anyway. I’m getting a sense that private equity financing is the way of the future in real estate anyway. The mortgage business only makes sense if you go into it with the full expectation that you never really want to own the home that you “bought.”
This is wise. I know a cop who saved and saved, bought a foreclosed house for cash, fixed it up, sold it, bought another fixer-upper, and so forth. Even through the recession. He is now living in pretty nice digs. The trick is that closing costs on both ends will kill your profit in some areas, so you have to consider this.
To clarify-DeMarco is still Acting Director, unless and until Obama would do a recess appointment or pending Senate approval of a nominee.
We are in full agreement.
Not much need for that since the Fed made refi so easy. That will cost your children and their children billions if not more from dollar volatility.
If they want to sell they can pick up the closing costs ;) Plus they are lower with no loan involved - origination fees, etc...
I’ve been toying with the rental idea, but just can’t quite make the leap with the way things are.