Wow ... I might get around to posting some thoughts on this election, one day. I alternated between proud, worried, optimistic, hopeful, and any number of other emotions yesterday, and like so many others followed the coverage well into the early hours of Wednesday morning. January 20, 2009, we'll be inaugurating the 44th President of the United States, President Barack Obama, and congratulations to President-elect Obama and his family. Regardless of whether your candidate won, lost, placed or didn't even show, it was monumental for any number of reasons.
So what's an Obama administration mean to the housing market? Well, his website lays out a plan:
Protect Homeownership and Crack Down on Mortgage Fraud - Obama and Biden will crack down on fraudulent brokers and lenders. They will also make sure homebuyers have honest and complete information about their mortgage options, and they will give a tax credit to all middle-class homeowners.
- Create a Universal Mortgage Credit: Obama and Biden will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.
- Ensure More Accountability in the Subprime Mortgage Industry: Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.
- Mandate Accurate Loan Disclosure: Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.
- Close Bankruptcy Loophole for Mortgage Companies: Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.
Additionally, REALTOR Magazine did an interview with both Senator McCain and Senator Obama, and they asked "What's the most important action the federal government can take to ease the mortgage crisis and prevent a recurrence?" Senator Obama responded:
For the short term, the housing relief legislation [signed by Pres. George W. Bush July 30] authorizing the FHA to refinance the mortgages of struggling homeowners is the right approach. I’ve also called for the creation of a $10 billion foreclosure prevention fund that works in tandem with state, local, and community nonprofit efforts to help households facing foreclosure renegotiate with lenders or put their homes on the market. We also need to expand the mortgage revenue bond program to give state housing agencies $10 billion in new resources to help struggling homeowners. For the long term, the Stop Fraud Act that I introduced two years ago would create criminal penalties for mortgage professionals found guilty of fraud and increase funding for federal and state enforcement of antifraud programs. I also want to see a simplified, standardized metric for calculating the costs of a home mortgage, similar to the annual percentage rate used by banks to identify the effective interest rate a borrower ends up paying on a loan.
Possible? I don't know. I have to think that in some respects, Congress - and a new President - don't want to get into a fight with the banking lobbyists. And while his idea of tax credits might be a good idea, it also means government's going to be receiving less money. So how do these "sweeping reforms" happen?
I've no idea. Lots of promises are made on the campaign trail, who knows whether or not a new administration can work to fix what ails us. The popular vote seems to think that it can, so we'll see ...