The Real Estate Lobby Is Ready to Rumble

Financiers, homebuilders, and real estate agents are uniting to save mortgage subsidies Martineck

By Lorraine Woellert

Barbara J. Thompson plans to put a human face on the high-stakes debate over whether to preserve cherished U.S. government subsidies for home loans. Hundreds of faces, in fact. Next month, she’ll lead a legion of “everyday people” to Capitol Hill to affirm the virtues of homeownership and urge Congress not to abandon federal support for low-cost mortgages. “These are your neighbors, they’re the people who teach your kids at school, they’re your firefighters,” says Thompson, executive director of the National Council of State Housing Agencies, whose members help provide loans to first-time home buyers. “The middle working class is the bedrock of our country.”

Joining Thompson’s cause will be thousands of homebuilders, real estate agents, civil-rights leaders, and bankers who aim to deliver a similar message to Congress: Preserve government support for housing. Together, these groups represent what one might call, with apologies to President Dwight D. Eisenhower, a real estate-industrial complex that transcends partisan politics, geography, and socio-economic divides.

What unites them is a desire to protect a near-century of grants, tax breaks, and insurance policies funneled in large part through the government-owned mortgage-finance companies Fannie Mae (FNMA) and Freddie Mac (FMCC), which played starring roles in the U.S. housing crisis. Fannie and Freddie bought home loans from banks and sold them to global investors with an implicit government guarantee to cover losses in the event of a default. The arrangement helped foster an $11 trillion mortgage industry and supported a housing sector that overheated—and then started unraveling in 2008.

Now as lawmakers begin to overhaul the system, the housing lobby is mobilizing against its common enemy: a Republican plan to eliminate the federal government’s guarantee of mortgages. “It’s a coalition that’s going to be very difficult for our adversaries to beat,” says Jerry Howard, president and chief executive officer of the National Association of Home Builders. “We’re preparing for one hell of a fight.”

The group includes financiers who want to keep capital flowing on Wall Street, legions of real estate brokers and builders whose incomes depend on a robust housing market, and activists committed to the cause of shelter as a basic right. Among the ranks are some of Washington’s biggest players, including the National Association of Realtors, whose members donated $3.9 million to candidates in the last election cycle, making it the nation’s biggest political action committee. Then there’s the American Bankers Assn., another powerhouse, which spent $6.2 million on lobbying last year, according to the Center for Responsive Politics. “It’s David and Goliath,” says Daniel J. Mitchell, an economist at the free-market Cato Institute who favors eliminating the government guarantee. “Not all hope is lost, but I’m not brimming with optimism.”

On Feb. 16, the National Fair Housing Alliance, a civil-rights coalition, will bring together the Financial Services Roundtable and the Center for American Progress, a think tank aligned with the Obama Administration, along with other influential players to explore areas of common interest. The mortgage guarantee will be one of them, says Deborah Goldberg, who is leading the alliance effort. “Eliminating the government role in the secondary market is not the fix anybody is looking for,” Goldberg says.

Lax subprime lending standards and conflicts between the public’s interest and obligations to shareholders helped drive Washington-based Fannie Mae and Freddie Mac, based in McLean, Va., to the brink of collapse in 2008. The U.S. Treasury Dept. took control of the companies that year and has since advanced them $151 billion in taxpayer money to keep them solvent. Fannie and Freddie spent more than $164 million on lobbying in the decade leading up to the financial collapse. They now are banned from influencing Congress.

6 Responses

  1. Yes. No need to apologize. It’s these state and Fed. agencies that claim they are all over the fraud when in the real world they post laws for help then look he other way

  2. Joyce Louise

    Do not apologize — great post.

    Your comment says it all—“but where is the voice for those who served their purpose of helping this sector make their wealth and who are now being discarded as a cost to our society.”

    Thank you.

  3. I greatly apologize for the lengthy post. I should have done a better job even if it was 4:50 a.m.

  4. !00% right Joyce.

    Protecting their rights to create loans designed to fail, practice fraud, and predatory lending. Shuffle the home buyer victim through the process and let the tax payer flip the bill when loan defaults. All that matters is their greedy profits. I’m surprised they’re not going for it promoting all states to become Non-Judicial so they can process the fraud more easily.

  5. Ofcourse

  6. I am greatly concerned about this article. Here we have that sector of Realtors, Developers and Home builders, and banks, the very people who not only sat back and watched the victimization of so many middle working class and were used to enhance the profits and wealth of so many of this very sector, the builders, realtors, banks, etc.

    They have in effect actually caused a substantial part of the ways and means of destruction of this economy, and are now banding together to promote ownership and home preservation for the future. Yes, that needs to be done, but where is the voice for those who served their purpose of helping this sector make their wealth and who are now being discarded as a cost to our society.

    Certainly, this government has not performed by offering worthwhile, meaningful options to help these people save their homes. What is wrong with keeping the homeowners in their current homes and giving back the ones the banks stole from them after they were no longer needed..

    So many of these homeowners who did make the right choices by some miracle, have lost their jobs and can’t make their payments, all because of groups like this that were looking after their own best interest and now, in fact, looking to the future to continue their own best interest.

    I am not by any means against homeownership, I am against this sector because they in my opinion, have no ethics and are strictly profit motivated. Without the housing industry, how can they survive. They can’t. I have so many cases whereby I can show how this sector so allowed all of this to happen and how they pulled it off.

    Any voice they have must go to helping homeowners defend themselves against their loss of their currrent homes and then move to preserve future loan programs for the up and coming buyers. Vultures doesn’t begin to describe this sector if they are going to desert current day homeowners who are losing their homes. They can band together if they want, but they should have a fight on their hands from the American people,

    If the American people don’t realize by now that they are being lead around by their noses by this group, then sadly, the outcome will not be good for America as a whole. Who would harm thy brother is pretty clear to me.

    We do not need sub prime lenders when the mindset of this sector, who is attempting to use those like Barbara Thompson to pave the way for their future business. Business is good and needed and runs the wheels of our economy, but certainly, we cannot run over the people and mold and use them for gain.

    This sector has never really gotten the credit they deserve for their lack of action to protect their clients. The MBA and the NAR are a disgrace to their profession. Where were the warnings by the realtors to the public. The very people who had a lot to gain , by laying low and doing nothing to halt the dangerous loan programs to the “middle class working people, the bedrock as she states, and now rather than arguing for those millions who are losing their homes, they want to preserve homeownership for the newcomers who once again represent a means as a new product for them to make their money.

    Looks like now that the government and these organizations have proven they are going to continue to lead these poor homeowners to the slaughterhouse, they are going to grow a new heard of cattle that can offer them what they want, a means to make money.

    I wanted desperately to assist the industry in getting back on its feet by coming up with programs whereby the funding helped the people, not the servicers and the lenders. but there was no voice to assist in that effort to the extent that was needed.

    These homeowners are fighting for their rights independently, without a voice other than this website which has truly been a valuable and comforting source for those homeowners who have suffered in the loss of their homes and their current fight to keep them. What about these homeowners? Are they not part of the Community? Do they not court?

    Barbara Thompson, please respond to this site, enough is enough. Perhaps I am just not understanding what it is the very sector that you represent want out of the deal or better yet the true reason for such action. Unfortunately it is coming across as a profit seeking venture.

    I have been through the 80’s, 90’s and now the current demise. Where will the demand come from for the people and a mandate that the foreclosures stop and stop now until we can regroup with a worthwhile program.

    23 billion to Hamp and 11 billion more to FHA insured Hamp. Ridiculous because the money is not being used to help the homeowners. 38 applications have been taken and it is supposed to help millions. Reminds me of the 2007 Bush plan when only 15 applications were taken for a program that could never have worked. Nothing against children, but our government certainly has that mindset. They have to be told what to do and by the right people and that is just not happening.

    The Congress is out along with their regulatory agencies that report to them. Shapiro at the SEC advised the industry that due to spending freeze by the Republicans, they cannot do their work. What about the billions extended to this department over the past 10 years and we are in worst shape than ever. Where did that money go? Shapiro needs to find a way to protect the prople on half that amount. Let’s get real..

    Banks can make loans and Fannie and Freddie can continue to buy them. I know that this is necessary. Preserving home ownership does not start with making new loans to new home buyers, but fighting to keep those that deserve it in their homes that they now own. This whole thing is beyond being ridiculous.

    It would be my hope that homebuyers would say No to this group until they have cleaned up their act. By the way, what people have joined this group.

    Buiilders and developers who worked in tandem with each other, opening their own mortgage companies and selling homes through their programs to persons who could not afford them. Realtors who sat at the closing tables day in and day out watching as innocent homeowers and yes, I say most were innocent of what was happening, and did nothing through their NAR organization to protect, again, the middle class working or low to moderate income families. Where are the civil rights organizations that should be working to halt the foreclosures until this demise can be worked out. ? Did they too forget about the homeowners losing their homes as well. What a terrible shame.

    Clearly, this sector means to preserve homeownership and I know that must be done. But their responsibility goes with those that are trying to hang on to their homes first and the government if involved, needs to come up with worthwhile and reasonable programs to help them do that. Instead, they are forcing one homeowner after another to go to Court to defend their rights, while these people march on Washington to preserve homeownership for new buyers to buy the homes that of those that lost them due to their actions. buisness for themselves by attempting such a move at this time. . When I saw this post, I realized that I was right. It is not the home the industry is attempting to foreclose, it is the homeowner. He has through the victimization of this very sector, is no longer an asset for any bank because it represents a cost to them to service these loans and of course, they are not marketable as a viable product. In otherwords, these people who are being foreclosed on, have served their purpose to the builders, developers, realtors and the banks and Wall Street. They are to be discarded now while this group comes out of the blue to protect newer ownership for first time buyers, etc.

    There can be some good of course in maintaining home ownership, that is what drove this country for so many years and I agree it must be preserved. But before that is preserved for that sector, this group is way off base not backing up the homeowners who are now losing their homes and who are now being used as bait for the attorneys across this nation. Whether it is a class action suit, a joinder suit, a foreclosure mill, attorneys representing banks and Wall Street, they are the scavengers and yet, this group, is out fighting for the government to continue with programs that will help new buyers of homes.

    I hope that I am wrong and will probably hear from those that think I am wrong. This band of people do not come to the table with clean hands, no, not by any means. But if theywere righting the right battle and for the right reason, would that not be a God Send.

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