Like a hurricane

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« Realtors are like Bushies? | Main | More in one place, but which place? »

Like a hurricane

The mortgage industry's current disarray is like New Orleans after Hurricane Katrina, an industry executive said Wednesday.

"Nobody knows what it's going to be like, but it will be different," Steve O'Connor, senior vice president with the Mortgage Bankers Association, said during the National Association of Real Estate Editors' annual conference, in Dallas.

The U.S. is going through its greatest housing crisis since the Great Depression, O'Connor said. "These are unprecedented times."

O'Connor gave a rundown of various government initiatives his association supports, including an overhaul of the Federal Housing Administration, a bill that would have the government back troubled mortgages if lenders drastically reduce the amount owed, and includes a tax credit for first-time home buyers and changes to federal real-estate laws.

But the government should move cautiously, he said. "Let's not overreact. Let's not pass bad policy."

"Exhibit A" of bad policy would be allowing judges to "cram down" mortgage balances against the will of lenders, O'Connor said, calling that a "disruptive" measure that would "distort costs."

Responding to a question about criticisms that lenders have not done enough to modify the loans of troubled borrowers, O'Connor said lenders have helped 1.2 million borrowers since July and have been "ramping up" their capacity to deal with more.

"Another big challenge is getting borrowers to call their lenders," he said. "We're finding over half of borrowers who are behind aren't calling their lenders."

O'Connor also said lenders did not expect a government bailout.

"There is zero sympathy for the lending community," he said.

Posted by at May 7, 2008 7:15 p.m.

Comments

#126444

Posted by Mack McCoy at 5/7/08 11:10 p.m.

It's clear that the spokespeople for the real estate business lack a literary bent.

I feel for you, bro. But at least you're getting paid. Every one else is there voluntarily!

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#126463

Posted by unregistered user at 5/8/08 12:51 a.m.

"It was the best of times, it was the worst of times..."

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#126490

Posted by TheProfit at 5/8/08 6:39 a.m.

One solution to the housing crisis would be to facilitate groups people to pool their IRA savings and buy foreclosed homes, with the rental income going back into their IRA accounts.

IRA accounts represent an untapped potential. You can but stocks and bonds via an IRA account. But you cannot easily buy real estate. Why not?

TheProfit

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#126496

Posted by DavidB at 5/8/08 7:05 a.m.

Government intervention is not the solution. That will just delay the home price correction that needs to happen before this crisis is behind us. It was the government and the lenders that created the bubble. No one bailed out investors when the stock market corrected itself.

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#126513

Posted by Kary L. Krismer at 5/8/08 8:18 a.m.

This sort of stood out: "The U.S. is going through its greatest housing crisis since the Great Depression, O'Connor said. "These are unprecedented times." . . . But the government should move cautiously, he said. "Let's not overreact."

Let's hype the issue, but let's not over-react.

Interesting he mentioned "cram down" of loans. That's a bankruptcy reference (and an incorrect one at that). I've been advocating removing the protections residential lenders get in Chapter 13. I wonder if that's gaining traction? I'd be surprised if it is, because campaign contributions drive bankruptcy policy, but I guess it's possible.

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#126517

Posted by Mack McCoy at 5/8/08 8:27 a.m.

It's not "easy," but can use your IRA to invest in real estate.

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#126569

Posted by Leanne Finlay at 5/8/08 10:05 a.m.

Mack is correct, you can use your IRA to invest in real estate. You cannot live in the property, nor can your parents or siblings, but you can rent it to anyone else you wish.

A good website is www.entrustnw.com to learn more about this.

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#127121

Posted by unregistered user at 5/9/08 3:36 p.m.

The lenders themselves should figure out Econ 101 and make all the properties in foreclosure a special exception, add the arrears to the end of the note, drop the interest rate by 2% for 5 years, and prevent these people from losing their homes - without making them re-qualify.

Preventing the foreclosures, even at a $$$$$ cost, will keep home values from plummeting further, which also means fewer foreclosures.

Why don't the lenders figure this out? Did they quit hiring economic MBA's and actuaries?

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