Mike’s Real Estate Show

The proposed FHASecure plan (http://www.hud.gov/news/release.cfm?CONTENT=pr07-123.cfm) I  think is a band-aid on a patient facing multi-amputees. The loan limits are $363,000 so that eliminates our area of the SF Bay Area. We went through this during the S&L crisis back in the late 80’s. We took the drastic but needed steps of creating the RTC(Resolution Trust Corporation) which gathered all the property secured by the then paltry savings of the S&L’s and revealed them all and then sold the whole lot. I believe I still have one of the first RTC catalogs (imagine the yellow pages of New York City!!).

What this wholesale sell off of these assets provided was value to an otherwise unknown commodity. Sound familiar? But this time out it is the huge “tranches” of loans held by the big boys of Wall Street. This, in the words of columnist Lou Barnes, is all about credit-not liquidity. Once you find out whateveryonee owns then you can sell them off and get on with the business of restoring confidence in the loans we don’t sell to Fannie Mae/Freddie Mac or are insured by FHA. And I don’t mean to be political but we also have the “Road Home Program” in the south which is supposed to aid Katrina victims. Been to the hard hit areas of the south lately? Lastly, here in “bubble-land” or the “Coasts” as they are called, we have properties that are not just upside down $10,000 or $20,000 but $50,000, $100,000, $150,000! Do we write completely new loans on these properties and have the government pay-off the difference to the lender? Does the government enact special tax forgiveness for the debt relief issues? When the S&L’s went belly -up and then we had the subsequent market “correction” of the early 90’s, politicians exclaimed we can’t let this happen again! But here we are once more. And once this hiccup is ironed out and everyone, except the consumer, is bailed out, they’ll do it all over again!!