Oh my, on the housing real estate front, his SOTU speech was even more dissappointing than I had anticipated. While President Obama spoke, I was at the rain-drenched McFarlin Auditorium at SMU hearing out Michael Lewis, author of The Big Short and his latest book I am dying to devour, Boomerang. I thought it ironic that Lewis told us how we are socializing big banks, and described the incredible graft and greed in Greece that has led to their almost total economic downfall. Example: on the Greek railroad, the average worker earns about $150,000 a year.
As a result, train tickets in Greece are inflated to such an extent that it costs the government less to put citizens in a private taxi than to provide transportation via a train ticket. Oh and Goldman Sachs helped the Greeks dig their economic grave. Lewis spoke for over an hour, but his point: we cannot blame any one political party, Wall Street (grrr) institution, legislation, or President for our financial crisis. We brought it about ourselves because we want everything but want to pay for nothing.
So I come home and learn our President merely touched upon a couple initiatives and potential bills that would impact homeowners about as much as a hangnail: refinancing mortgages by expanding HAMP, one of the most failed federal programs ever, and more policing/punishment of those who broke the law that led to this crisis: Real Estate Retro-Cop. That is just plain stupid! First of all, many did not break the law, they found loopholes. Secondly, how will you get the money back and how much will it cost? Thirdly, how does that help get the housing market get chugging again so we can create jobs?
Bottom line: Lewis said that in 9 years when his daughter graduates from college, he expects we’ll still be slogging through a constipated (my word) economy. And it will be tough for her to find a job.
On refinancing mortgages from the SOTU:
“Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief. That’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.”
A deficit of trust, wow.
Fund this with a fee on financial firms with more than $50 billion in assets. Which they will likely pass onto consumers. Loosen the restrictions on who is eligible to refinance their mortgage beyond those who have loans backed by Fannie Mae and Freddie Mac. With long-term rates hitting 3.88 percent last week, the initiative could help individual homeowners. Course rates are low, the problem is as we all know, no one’s lending.
On RE retro-cop:
“This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans. A return to the American values of fair play and shared responsibility will help us protect our people and our economy.”
The unit that President Obama described will include officials from the SEC, IRS and the Department of Justice. It would be co-chaired by New York Attorney General Eric Schneiderman. Just what we need. More overhead after the fact. The guy just doesn’t GET IT!