As the Obama Administration is about to unveil a new stimulus plan for troubled home owners this week which is likely to revolve around refinancing accessibility (i.e. making it easier for borrowers facing foreclosure to refinance), I would like to reflect briefly on how the US Real Estate market can recover in 2012.
From the perspective of a Real Estate Agent, there is little doubt about how the market can recover: Stop Foreclosure! Real Estate is not just for domestic and foreign cash investors which today fuel a substantial portion of Silicon Valley Realtor's activity. Real Estate is synonymous with the American Dream of Home Ownership going back to the post-World War II era. Probably the best quote ever on home ownership comes from President Roosevelt: " A nation of Home Owners is unconquerable". Whether this dream can come true and this goal is achievable respectively for and by everyone is another debate.
From the perspective of home owners, this means in particular enabling them to refinance at minimum cost (unlike today as lenders, Fannie Mae and
Freddie Mac pass on high risk-based costs to them),
which is what the Obama plan will address hopefully. In case refinancing is not possible and a short sale is the only option available, then let us hope that the government will put in place processes and legislation to ensure and expedite approval of pending and upcoming short sale where justified.
From the perspective of lenders currently stuck with a shadow inventory in excess of 1.6M homes (Source: Corelogic) and potential resulting abyssal losses on millions of mortgage loans, the one factor which would unravel the situation is most likely a financial incentive of some kind, which could take the shape of enhanced tax break on "lost loans", additional social charges deduction (e.g. specific to the workforce handling troubled real estate loans, etc) providing 100% compliance with federal requirements.
From the perspective of the current Administration, needless to qualify economic and financial benefits. Consumer confidence will generate an upward virtuous circle starting with consumption, economic activity, financial investment, redistribution of wealth and down the road construction and real estate. A marginal step forward in the right direction and promising Real Estate stats could guarantee a second mandate for the Obama administration.
In other words, the US Real Estate Market crisis can only be resolved at the mutual benefit of lenders and homeowners, with sacrifice and commitment from both sides, not at the expense of any one of them.
Legislators, lenders, home owners, together, let us bring back consumer confidence and break the foreclosure gridlock!
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575