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Thursday, October 23, 2008

NAR's Stimulus Plan

The National Associaton of Realtors (NAR), who I'm a member of, recently presented a stimulus plan to congress. Why shouldn't they since congress seems to be doing anything that they feel is going to boost confidence in the market. It is only tax money after all. Here it is and you can also read about it at http://www.mortgagenewsdaily.com/10222008_NAR_Four_Point_Plan.asp.

  1. $7500 tax credit to all buyers without having to pay it back.
  2. Urge congress to use some of the $700 billion to buy mortgage backed securities.
  3. Extend credit to Main Street, making credit more accessible to consumers and businesses. Expediting the short sale and REO process.
  4. Make permanent the prohibition of banks entering real estate brokerage and management.

I don't like to disagree with my association because they do mean well especially for the people in our industry. This is about principle for me and so I'm going to express myself and explain why I don't agree with these recommendations.

  1. The tax credit I don't have much of an issue with because I think we are overtaxed anyways. As long as the credit is only applied against the federal taxes that have been paid in because otherwise the tax credit becomes a social welfare program.
  2. I'm against the bailout plan and I'm against using tax money to buy bad investments. Why are we trying to fix prices. If someone fails then allow them to fail because another investor or corporation will come in and replace them and fulfill the demand for their services.
  3. How do you force anyone to extend credit or force them to expedite short sales? This would be great because I know that there's many realtors and buyers that don't like short sales because dealing w/ the banks and lenders is a huge pain and not worth the effort. I really believe that lenders are getting paid by insurance companies and this is why they take forever to expedite a short sale if they expedite one.
  4. Well NAR is trying to protect the careers of its membership. I welcome competition and especially competition from the banks. Realtors distinguish themselves from the competition because we build our relationships and hold our clients hands through the home selling or home buying process. After dealing with banks on some real estate transactions and hearing other Realtors' horror stories, I know that the banks would not be able to compete and they would make Realtors look that much better.
Prices will hit a bottom. We need to face the fact that the real estate bull market happened because of speculation and creative financing. A very liquid market put prices out of reach for many that some decided that the only way they would ever get into a home was with a negative amortization loan. Prices are dropping and rent continues to climb making buying a home an option for many that were priced out. Let the market take care of itself.

There are companies out there helping borrowers stay in their home. There are people everywhere that have hardships and I refer them to Green Credit Solutions, http://www.getgreencredit.com. They offer loss mitigation services and have been able to modify many loans and for those that can't be modified they negotiate the short sale or deed in lieu of foreclosure. I advise the client that they can always do these things on their own but like everything else, sometimes it pays to pay someone to work for you.

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