Yesterday, President Obama gave a speech on homeownership at Desert Vista High School in Phoenix, Arizona, one of the hardest hit cities in the nation.
While it was mostly fluff many of us have heard before, there were some nice little takeaways. I’ve listed what I feel are the top 10 quotes, based on their impact, candor, and humor, in the order in which they were said.
1. I think about my grandparents’ generation…in that earlier generation, houses weren’t for flipping around, they weren’t for speculation — houses were to live in, and to build a life with.
Housing needs to be perceived as shelter again, not solely as an investment, according to the President.
2. We cracked down on the bad practices that led to the crisis in the first place. I mean, you had some loans back there in the bubble that were called “liar’s loan.” Now, something that’s called a liar’s loan is probably a bad idea.
Obama knows stated income loans are bad news, though it’s unclear if he knows they’ve already begun to resurface.
3. Congress should pass a good, bipartisan idea to allow every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today’s rates. We need to get that done. We’ve been talking about it for a year and a half, two years, three years. There’s no reason not to do it.
He continues to push for HARP3 or MyRefi, though such a program looks dead in the water because he’s asking Congress to get it done. And rates have risen substantially.
4. Housing prices generally don’t just keep on going up forever at the kind of pace it was going up. It was crazy. So what we want to do is something stable and steady. And that’s why I want to lay a rock-solid foundation to make sure the kind of crisis we went through never happens again. We’ve got to make sure it doesn’t happen again.
Here comes major housing reform…
5. …one of the key things to make sure it doesn’t happen again is to wind down these companies that are not really government, but not really private sector — they’re known as Freddie Mac and Fannie Mae. For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was “heads we win, tails you lose.” And it was wrong.
Yes, Fannie Mae and Freddie Mac were responsible for the housing crisis, though many other organizations were as well. To be frank, the entire system is broken.
6. …private capital should take a bigger role in the mortgage market. I know that sounds confusing to folks who call me a socialist — I think I saw some posters there on the way in.
A little bit of humor mixed in with a very serious point about the housing market being far too reliant on the government, with pretty much every loan backed by Fannie, Freddie, or the FHA these days.
7. …we should preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage. That’s something families should be able to rely on when they’re making the most important purchase of their lives.
The good news is the 30-year mortgage isn’t going anywhere, regardless of the reform that takes place, or is it?
8. They’re designing a new, simple mortgage form that will be in plain English, so you can actually read it without a lawyer — although, you may still want a lawyer obviously. I’m not saying you don’t. I’m just saying you’ll be able to read it. There won’t be a lot of fine print.
This pretty much sums up the ongoing cluster that is the mortgage industry. Perhaps the concept of mortgage reform is more elusive than we think.
9. So I want to be honest with you. No program or policy is going to solve all the problems in a multi-trillion dollar housing market. The housing bubble went up so high, the heights it reached before it burst were so unsustainable, that we knew it was going to take some time for us to fully recover.
It’s going to take a while folks…be patient.
10. More Americans will know the joy of scratching the child’s height on the door of their new home — with pencil, of course.
Translation: The American Dream is still alive and well.
Every time someone at the top, whether the POTUS or someone in Congress or the FED says they are going to improve and reform mortgage lending, I shudder in horror, as does the rest of the industry, waiting to see what they will screw up next.
So far, they have destroyed accountability for appraisers, ruined the livelihood of loan officers, appraisers, and smaller lenders alike, while pandering to the big banks, wall street honchos who got us here originally, and creating new wealth for – appraisal management companies?? Good people with strong credit, good equity and huge liquid assets are now told to go jump in a lake.
People with DTI’s of 190 can still get a FHLMC HARP though. Of course, the arbitrary cutoff date killed it for a ton of FHA and FNMA/FHLMC refinances. Now rates are up and whatever they do will be too late for millions who missed the boat.
FHA is losing money? Wah,wah,wah!. That is their job! What else? Oh yeah, if I want to cut fees, or cover something for a client, I can’t do it, since both our maximum and minimum compensation is fixed. What idiot came up with that one? Imagine your butcher saying, hey I’d like to throw a few extra slices of bologna on there as you are a good customer, but I can’t under federal law.
So the borrower loses out (no negotiating ability) and the lender loses out ( can’t save a deal or sale).
Oh, and we are forced to either waste the clients time and money on an appraisal that never had a chance, or rely on the pathetic databases like Zillow, etc. since we can’t even talk to the appraiser and get an opinion as to whether the range is there.
Meanwhile, all the big money center banks are making record profits in mortgages, while the landscape is littered with the bodies of brokers and mortgage bankers. BTW, I work for a federal credit union. Why? Because I got tired of spending half my time and money obtaining and renewing licenses for every state I wanted to do business in. Federal licensing and background checks? Fine by me. beyond that it gets onerous. Sorry for the harangue.