Human cost of protracted housing crisis adds sense of urgency to conference on identifying solutions to negative equity and slow home sales
By Robert Freedman, Senior Editor, REALTOR® Magazine
On the day the Wall Street Journal ran an op-ed online calling for federal action to get the housing market moving again, a group of lawmakers, industry leaders, and policy strategists were devising ways to do just that.
Sen. Johnny Isakson (R-Ga.) called for allowing underwater home owners to use money from their retirement accounts to help them stay in their home rather than lose it to foreclosure. Rep. Dennis Cardoza (D-Calif.) called for lenders to refinance mortgages of troubled home owners without requiring an appraisal. Richard Smith, president and CEO of national real estate brokerage giant Realogy Corp. called for a share equity program and also to make federally backed mortgages assumable.
These were just a few of the ideas to come out of a day-long meeting, hosted by two policy think tanks, the Progressive Policy Institute and Economic Policies for the 21st Century, that these and other housing leaders participated in to find solutions to the housing crisis.
“This meeting called by the private sector is the kind of meeting that ought to be taking place on Pennsylvania Avenue and in the Capitol of the United States of America,” said Sen. Isakson.
NAR President Ron Phipps set the tone of the conference when he said the market is capable of self-correcting but it needs two things. First, it needs the federal government to stop intervening (or threatening to intervene) in the market in the wrong way such as by imposing a 20 percent down requirement in the qualified residential mortgage (QRM) rule or by talking about curbs to the mortgage interest deduction. Piecemeal federal intervention in foreclosure processing isn’t helping, either. Second, it needs the government to intervene in smart ways. Hence, the search for solutions like those offered up by Sen. Isakson, Rep. Cardoza, and others.
Had the conference, called “New Solutions for America’s Housing Crisis,” been merely a talkfest among policy strategists, many of the ideas for getting housing moving again might not get to the ear of Congress as quickly as many would like. But with several lawmakers there, including Sen. Isakson, Rep. Cardoza, and Sen. Jeff Merkley (D-Ore.), half the battle of getting the ear of Congress has already been won. Sen. Isakson is a widely respected leader in the Senate on real estate issues and Rep. Cardoza has been on the forefront in seeking solutions to the housing crisis, as you would expect he would be: his district is in California’s central valley, one of the hardest-hit areas in the country. In some parts of his district, underwater home owners outnumber those with positive equity by a factor of three-to-one.
In his Wall Street Journal piece, Neal Lipschutz made an important observation. “There are reasonable proposals offered from many corners that don’t spell stimulus in capital letters but would do some good,” he said. The housing conference, which got underway just about the time his piece came out, makes it clear that it’s not because of a shortage of ideas that the housing market is stuck in neutral. What’s needed, rather, is leadership, said President Phipps. “We’ve had plenty of talking about blame,” he said. “We need to get to solutions.”
The 4-minute video above summarizes the solutions to come out of the meeting.