In Congress, Change is Coming, but What Change?

By Robert Freedman, senior editor, REALTOR® Magazine

However you look at it, the upcoming midterm elections in November will be important for real estate.

Home sales and commercial real estate are still struggling, just like the broader economy. So, candidates for Congress, both challengers and incumbants, will have their eyes on real estate.

After the elections, Congress is set to look at what to do with Fannie Mae and Freddie Mac. Flood insurance reforms are still pending. FHA reform is still pending.

More broadly, members will be grappling with what to do about the federal budget deficit. What will they do about taxes? What will they try to cut?

You can be certain what they do with taxes and cuts could impact the environment for selling and leasing real estate, both residential and commercial.

On a positive note, homeownership in important ways remains above the partisan fray. It’s a bedrock values issue for members of Congress. That’s not to say there won’t be pressure on lawmakers to consider changes that could impact homeownership. Anything is possible. But real estate issues start with solid, bipartisan support because lawmakers understand how fundamental homeownership is and how critical commercial real estate is to the economy.

To get an idea of what’s ahead in the upcoming elections, the magazine sat down with NAR Chief Lobbyist Jerry Giovaniello and RPAC Managing Director Scott Reiter (see the 5-minute video above). What they made clear is that REALTORS®’ involvement in the political process is more important than ever because the stakes today are so high.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at

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  1. I can’t believe we have so many people in office that don’t have a clue as to what direction to go. I wrote a 2-3 page outline as to how I thought we should try to resolve the mortgage crisis and sent it to Joe Courtney, in fact I made it a point to go and hear Joe speak and gave it to him personally, and I also sent it to 3 others. I got the usual form email thanking me; of course one of the responses was thanking me for the wrong issue.

    I’m old, been at this for a long time now and maybe that means I come from an old fashion outdated perspective, on the other hand perhaps that experience could be helpful. A brief look back will tells us that around 1920 +/- if you wanted to purchase a home you would need a 50% +/- down payment and might be able to obtain a mortgage for 10-15 years. The depression spawned the FHA mortgage, the first mortgage ever to allow for a 3% down payment and financing for 30 years. As WW II wound up the VA came into existence. When I got into the business, 1966, we could not count a woman’s income unless she was a professional (school teacher or nurse). In the late 60’s or early 70’s the lending community determined that a woman’s income was stable and we were allowed to count it in qualifying for a mortgage loan. A short time later a new concept titled PMI was introduced. Why PMI, well one reason as that it was taking VA and FHA up to 16 weeks to approve a loan and PMI took 3 days. Another reason was that PMI cost half of what FHA cost. At last, we had a 90% LTV product that could be turned around quickly. It wasn’t too long after that that the 95% LTV conventional was introduced with PMI. Underwriting standards were strict, but reasonable. The next major obstacle was the money supply. From time to time banks ran out of money to loan. There were a few times we actually had to wait a few days to close a loan due to the lack of funds. Typically in a few days or weeks enough old loans would be paid off in the normal course of doing business and then those pending new mortgages could be closed. If I recall correctly the stated purpose of Fannie Mae was to create a vehicle that would assure a supply of money to the lending community. This lead to a “standardization” of the mortgage note and a “standardized” underwriting policy. As a result, the secondary market place was created. Lenders cold write to Fannie Mae standards and know that if they ever found themselves short of cash to loan that they could sell existing loans to Fannie Mae who in turn would resell those loans to large typically institutional, investors. So far, so good. And, it all actually worked reasonably well.

    It’s difficult to know exactly when we started to get into trouble. I’m sure someone knows better then I but I know what started the problem. Part of the problem was a political push to increase the rate of homeownership. A worthy goal, but the challenge was how to accomplish it. The primary answer became to reduce standards. Increase ratios; reduce credit standards, stated income, etc. Fannie Mae was actually a stumbling block so from what I understand “derivatives” were invented. No one knew what they really were but they sure were profitable. As the demand for more derivatives increased the demand for more dumb loans increased. It’s sad, but true, once the heard starts to move in a certain direction you often will find everyone wants to move in that direction so as not to be left out. And here we are.

    Rather than write a bunch of new rules and policy to replace the ones that did not work, why don’t we simply turn the clock back a bit and return to the standards that did work? Do you remember when the appraisal was an important part of the mortgage process? More recently do you recall that the lending community was contemplating how to eliminate the appraiser? What about FHA’s rule that said we don’t need a cost approach anymore in the appraisal process? Government has done some good things: FHA and VA were excellent examples of policy that worked but over time just got bogged down in part due to laziness on behalf of labor. No one was responsible for anything. Funny how when no one is responsible things turn to crap pretty quickly. Fannie Mae worked well, and then we had to fix it, and it turned to crap as well.

    Most solutions, once recognized, are often really quite simple. Today we need a massive injection of consumer confidence. I think that takes two basic things, jobs and inspiration. (There are many other things that would go into the mix but I suspect these are the two primary ingredients necessary.) I don’t see inspirational leaders today but maybe inspiration would sweep the country, all be it briefly, if the majority of our incumbent representatives and Senators were run out of office this year. That doesn’t mean the newly elected officials will be any better but it certainly puts them on notice that change can happen pretty quickly. Perhaps during that process one or more inspirational leaders will emerge.

    Believe whatever unemployment numbers you want, it really doesn’t make much difference, 10% unemployment or 15% unemployment. Look at the other side, 85% employment. If these 85%er’s cold be inspired, just a bit, and would start to resume consumption that would lead to a couple of jobs, which leads to more consumption, and you can see where this might go. The other piece that might kick in is the time of the year, Christmas. The holidays can be an inspirational time.

    I just don’t see any other opportunity on the horizon. Congress has tapped out the credit card. The world is still a dangerous place and that suggests a continued strain on our military resources. Immigration is an important part of our history and culture, illegal immigration is killing us, literally and figuratively.

    I can go on and on but you get the picture. If we do get the “change” at the polls, then somehow that change needs to be immediately followed up on and our system doesn’t really allow for that unless it becomes a mandate by the people. Otherwise we go into lame duck until January which could wipe out much of the benefit of the change.

  2. Jerry Browning

    Caution. If we keep voting for the same old politicians we are going to keep getting the same old results. We are at a point now where we need IMMEDIATE CHANGE, plenty of hope and lots of luck. Fool me once shame on you, fool me twice shame on me (or however that thing goes). There will be an awful lot of garbage spewed out over the next few weeks but you already know it’s mostly hype and empty promises.. Read all you can, think for yourself, talk to others, pray hard, be still and listen, then go vote your gut. I don’t know of any other sensible way to do it. Just Vote and vote early.

  3. Alex Bogdanoff

    Remarkable how some one could twist 10% unemployment into 90% employment!! Just face it: Obama economics don’t work. He or his staff don’t have a clue on how to effectively stimulate the economy. They’ve never run a popsicle stand much less a country. Liberals will NEVER help our profession. Amedy, you wear your politics on your sleve like an old suit.

    Next thing you’ll tell me is that NAR is pushing for homosexuals as a protected class in real estate. Is this where my dues are going?