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EDITOR’S COMMENT: It is clear that once again the politicians are leading from behind, which is to say they are not leading, they are reacting. Well they should react to this: voters perceive the problem with the economy as related to housing. Economists agree. Voters also agree that the efforts to maintain the status quo for the mega Banks are wrong. Conclusion: Any politician who does not run against the Banks and who avoids the necessary solutions based upon truth and reality in the housing market, is committing political suicide. Voters are not buying what politicians are selling.

This applies to both Major political parties. One party, the Republicans actively supports the Banking lobby. The other party, the Democratic Party does so passively. We wind up with platitudes and action so tepid that it doesn’t make a difference. People want to see tangible improvement with realistic hope. And they know what is real because they are wide awake now and they don’t like what they see.


On the brink of a Presidential Election year, a majority of American adults believe that the federal government should do more to assist homeowners, many of whom have troubled mortgages or are teetering on foreclosure or bankruptcy.

That’s a key finding of a Yahoo! Real Estate survey of 1,500 current and aspiring homeowners, fielded in October. The study, known as Home Horizons 2012, was mapped to the U.S. adult population of homeowners and renters.

Altogether, 51% of American adults agree that the government should do more to rescue homeowners at risk of losing their mortgage, while 27% disagree and 22% don’t have an opinion. Among those with opinions on the matter, about two-thirds believe the government should offer additional assistance such as low-cost loans.

The study also finds that four out of five adults believe that the 2012 Presidential Election will have either a small or large influence on the housing market. Altogether, 43% of respondents believe that the national election will have a large influence on the housing market.

Neither major political party fares especially well in the study with regard to perceptions of the impact that either may make on the troubled housing market. One third of respondents said neither party would make either a positive or negative impact on the housing market.

However, more adult respondents stated that Republicans’ impact on the housing market would be negative, at 39%, edging the Democrats’ negative numbers at 32%. Accordingly, Democrats’ also scored higher positive numbers, 35% to the Republicans’ 27%.

With 11 months left until national elections, the troubled housing market is not front-and-center either in Republican debates or in Obama administration talking points. Congress, obsessed with budget deficits, appears to be experiencing bailout fatigue.

Seeking Help

Meanwhile, the housing crisis is still grim in some areas, particularly where high unemployment is the status quo. Although housing prices have stabilized in many parts of the country, it’s also true that home prices are still sinking in many cities such as Las Vegas, Nev., putting significant pressure on homeowners with negative equity.

The National Association of Realtors (NAR), a powerful industry trade group, favors government intervention. “Helping even more families stay current on their mortgage and remain in their homes will continue to reduce the negative impact of foreclosures on families and communities and aid in the recovery,” a spokeswoman told Yahoo! Real Estate.

According to Stan Humphries, Chief Economist at Zillow, “28.6% of single-family homes with mortgages are in a negative equity position. That’s about 15 or 16 million,” mortgages that may need assistance. But, he adds, “There’s no silver bullet to knock out negative equity.”

Humphries favors “options that keep the current owner in the house.” To that end, he contends that private investors have options that Fannie Mae and Freddie Mac might not be able to implement such as principle write-downs, renegotiating the terms of a mortgage to a lower rate, or in some cases renting out a house to current owner directly.”

What’s in Place

To date, the federal government has enacted two key laws to help homeowners with troubled mortgages refinance to more manageable payments:

    • The Home Affordable Foreclosure Avoidance Program (HAFA) is designed to help streamline the short-sale process; and

  • The Home Affordable Refinance Program (HARP) helps underwater homeowners avoid foreclosure by refinancing their mortgage to make it more affordable. But, the recently revised HARP 2 is only available for refinances of Fannie Mae and Freddie Mac held loans, according to NAR.

Is the program working effectively? Since 2008 there have been 4.02 million foreclosure sales, according to LPS Applied Analytics, but another eight million home mortgages are at risk according to a recent Bank of America report.

Still, through the third quarter of this year, the Federal Finance Housing Agency reports that it has “completed nearly 2 million foreclosure prevention actions,” of which “nearly 1.7 million … have allowed borrowers to retain homeownership, with more than one million being permanent loan modifications.”

But not everyone is happy about it. “The situation would be much worse if none of those programs or efforts had been tried,” contends Bruce Hahn, president of the Grassroots Alliance, an advocacy group in Arlington, Va. “But we still have an extremely serious problem. We need something more dramatic – a game changer.”

No Bottom Yet

Housing could take on a larger role in the 2012 national political debate if potential voters such as Bonnie, a renter in Kansas City, Mo., who is not in the market to buy a home, makes her voice heard. “I think homeowners should have a chance to keep their home, like lower payments etc.,” she says. “No one should be homeless or have to live in their cars. After all, we’re supposed to be a rich country. We send money to other countries and that’s okay, but I believe charity begins at home.”

Despite the passions of the electorate, there is no consensus political solution to the mortgage crisis. “A large-scale government policy that’s going to fix all of this – no one has seen such a thing,” says Zillow’s Humphries. “Stabilization in home prices and then a slow upward movement in prices to work down negative equity – that’s a multiyear affair.”

And homeowner bailouts may not appeal to the mortgage industry. “You’ve had many programs put in place to curb foreclosures and they really haven’t worked,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch, appearing as a guest on a Bloomberg program earlier this month. “You have a serious problem in the housing market that just needs to be worked out over time.”

Meyer sees no housing recovery on the horizon: “It will be hard for prices not to fall further – I would say another 5% decline from here on a national basis.” Paradoxically, if Meyer’s pessimistic forecast comes true, many more homeowners will demand mortgage relief programs from the federal government in 2012.

Though a thriving housing market recovery would appear to serve everyone’s interests, there are competing views about how to reverse the fortunes of this vital industry. Political solutions may be hard to come by, especially in an election year in which the presidency and possession of both houses of Congress are at stake.


6 Responses

  1. hey Fred–it’s “Flintstone”…

  2. Bankruptcy Trustee pays 100-300K per month to attorneys but frets that pro se homeowner-creditors may take liquidation monies away from the likes of Deutsche etc.

    attorney witness testifies she never thought of homeowner-borrower’s of New Century Mortgage to become creditors!! no notice given to homeowner-borrowers that New Century delcared banktuptcy.

  3. My two questions are: anyone out there applying for an independent foreclosure review? And has anyone received any kind of offer/response from the reviewer? I am applying for one and I have a question for someone who will email me with any info that will help me understand. I was in foreclosure and I filed BK7 to stop the sale to give myself more time to beg (it literally was just that) for a reasonable loan mod. The bank filed a motion from automatic stay. It was granted and the bank proceed to foreclose. My BK7 was discharged Mar 29 2010 and the foreclosure sale happened on Jul 15 2010. My question: is the bank allowed to keep charging the unpaid monthly mortgage payments after the BK7 dischage and add them to my final indebtness?

  4. @Nora,

    As you’ve noticed, I don’t take side with either party. I’ve read what Ron Paul has to say and I am happy to see that his polls rise. I like the few things I have heard coming from Huntsman and I like what I heard coming out of Obama.

    My problem is that… I find it very difficult to trust anyone at this point. Until I see anything remotely resembling justice, it will be hard for me to make up my mind.

    And I’m very pissed with Obama’s failure to veto the detention bill. The only consolation is that, by having voted it into law, America is now sure to be watched like a hawk by the rest of the world for any potential infraction to the Geneva convention.

  5. Ya know…not all the republicans support the banks. Ron Paul has been very outspoken about ending the federal reserve system, minting money through the treasury and returning to the gold standard or at least sound money that is backed by something concrete rather than a fiat paper.
    While I refuse to believe there is any difference in the two parties, since both are funded and stage-managed by the wealthy oligarchs, I firmly believe we can return to a balanced budget, free markets, true prosperity and peace, and most importantly the enjoyment of our own freedoms and liberties. We haven’t been able to pursue happiness since 1933. We need to stop thinking there are two political parties, because there aren’t. We entered a dictatorship yesterday with the passing of NDAA, and the sorry police state that was already under construction is now fully operational. We need to get behind Dr. Paul to restore the republic, and remove money from politics.

  6. To a large extent, the government programs have been nothing more than a bandage on a wooden limb. In some instances, they actually harmed homeowners who, in good faith, jumped on HAMP and still ended up foreclosed because HAMP bank participation incentives had not been made conditional to results achieved.

    Homeowners have tried everything to protect their rights and their families. Elections are probably the last chance they will have to impact on this country’s economy. Looking at the candidates, Obama has never voiced any disproval toward the banks other than call them “fat cats”. Aside from Huntsman, not one republican hopeful has even broached the subject of TBTF and the need to dismantle what can no longer be controlled. Yet, the polls taken from the 99% do not favor him.

    By devising such strategies as “filibusters” (which are absolutely not a tool provided for by the constitution and are a complete disgrace), congress has brought this country to a near economic standstill. A country that stagnates regressed. Countries are like people (duh! Made of people, you see…): they must always be in motion. If they stop moving forward, they start moving backwards. Many economists keep offering viable solutions no one wants to look at (Bill Black, Paul Krugman, Josh Brown, Dylan Ratigan, Mandelman and others) and most of the serious ones recognize that housing is the MOST important issue to tackle if we want to get out of our hole.

    Common sense confirms that, once people are fed and have decent shelter, they move on to create, invent, produce. The sad reality is that presidential hopeful are allowed to shoot their mouth off and tear each other down but not one of them is required or even asked to offer solutions.

    This is not an economic issue and it has never been. It is a moral one: do we want to exist as a country? Do we want to exist as a people? As a species? And make no mistake: whether or not humans survive what they caused makes abolutely no difference to Earth. Earth is self-cleaning. It’s gone through a lot more than one destructive species. Earth will still be here in millions of years.

    Will we?

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