A few weeks agowe celebrated Washington and Lincoln’s birthdays (two great leaders who deserve to be honored individually if you ask me.) Celebrating “President’s Day” implies we are celebrating my great, great uncle, once removed Millard Fillmore (which I assure you we are not), clearly one of the worst Presidents in US history!!
That got me thinking about Washington DC and all the “politics as usual” going on there. What a mess – really. Just a complete mess – but there is one specific mess I want to bring to your attention and here’s why – it will affect the value of your home.
Is Capitol Hill shifting toward anti-homeownership? With the new group of super conservative Tea Partiers swept into office in the last election, there was a decidedly strong sentiment that anything to do with existing government was bad and had to be eliminated. As our politicians so often do, they are throwing the baby out with the bathwater, addressing a legitimate concern with an extreme solution that will likely end up doing even more harm.
We’re talking about lending and Government backed Fannie Mae and Freddie Mac. Granted, lending got way out of control, loose and irresponsible during the build up to the real estate crash. There was a lack of balance between Risk and Reward – a Basic 101 of almost everything in life.
There was HUGE Reward to lenders and big financial institutions to make these toxic, 100% financed, stated income, subprime loans, but almost NO Risk, thanks to Wallstreet’s Mortgage Backed Securities. That was wrong and had to change.
But Congress is about to have that pendulum swing WAY to far the other way and is considering legislation that would ELIMINATE Fannie and Freddie AND the Mortgage Interest Deduction (MID). Why is this bad for you and your home values?
Because while Fannie and Freddie NEED to be reformed, they are there for good times and bad to insure and provide for real estate financing despite what is happening with private financing. If FHA/Fannie and Freddie weren’t there in any shape, way or form, chances are the Residential Real Estate market, as we know it, would be gone and home prices would PLUMMET.
Only about 5% of the real estate financing out there is strictly private. Get rid of all Government involvement in financing – and we have a market for all cash buyers and no one else. That doesn’t work for 99% of the clients I’ve worked with over the past 22 years.
So contact your Congressperson and Senator and say Reform – YES, Elimination – NO!! Representative John Garamendi, Representative Nancy Pelosi, Senators Feinstein and Boxer, need to hear from you. Because remember, as Real Estate goes, as goes the economy. Send these guys the message that if they can’t make it better, please, please, please at least don’t make it worse!!