© W.Scott – Fotolia.com

The problem becomes evident with a quick look at the stats – last December saw the number of properties listed for sale nationwide decrease by 8.5% from the month before to just 1.82 million in total, which is the lowest we have seen for several years, reports Investor’s Business Daily. As of today, existing inventories are 22% lower than they were just one year ago, with homes in the ‘low-priced’ category thought to be even scarcer than that.

Walter Molony, spokesperson for the National Association of Realtors, warns that the market is now entering an uncertain phase:

“We’re not sure what’s going to happen this spring, but it’s going to be very interesting to see what happens in the next couple of months.”

The big worry is that sustained price increases without any new inventory will ultimately hurt the real estate recovery. Homes could quickly become unaffordable as more properties are subject to multiple bidders, reversing the impact of current low interest rates we’re seeing now.

According to Molony, one of the biggest reasons for a lack of inventory is down to the restrictive lending standards of banks, which limits both buyers and new home construction. Loosening these standards would result in inventories going back up, but the problem is that banks refuse to entertain the idea.

Brian Moynihan, CEO of the Bank of America, said at a recent forum that the tight standards were necessary to avoid a housing bubble from reappearing:

“Credit has been restricted for a while, but … it had to be restricted because this is what helped open the problem up.”

Another reason why inventories are falling is because there are still legions of homeowners that remain underwater on their homes. For anyone in this situation, it simply isn’t worth selling as they would walk away from the sale with debt.

The Investor’s Business Daily says that things will pick up eventually when people who purchased their homes at the peak of the last cycle deem it profitable to sell up, although this won’t happen until 2014 at the earliest.

© jpldesigns – Fotolia.com

According to CNBC’s Diana Olick, one of the problems is that the rate at which home prices are rising is far outpacing what has always been considered normal. Historically, home prices have always increased at a rate of about 3% to 4% a year in a ‘normal’ economy, but some markets have seen increases that far outpace this ‘healthy’ level of growth – for example, Phoenix, Arizona, where prices have shot up 26% year-on-year.

What’s causing these price hikes? Experts suggest that lower inventories are one of the main driving forces, with lack of availability forcing prices up as buyers try to outbid each other for those ‘plum’ properties that remain. According to Olick, inventories are now at their lowest level since May 2005, citing data from the National Association of Realtors.

Lawrence Yun, NAR chief economist, states that this is indeed his greatest concern right now:

“Even if we see an increase in the spring and summer, if home sales hold at the [current] level or even a 5- to 6-month supply, price increases are guaranteed. We don’t want to see rapid appreciation in prices faster than income,” stressed Yun.

The main worry is that, historically at least, healthy gains in the housing market have always been driven by rising levels of income and employment, as opposed to a lack of supply. In effect, the gains we are seeing now could well be unsustainable.

Also concerning is the impact that investors are having on markets, writes Olick. Some of the worst hit markets during the recession, such as Las Vegas, California, Florida and Phoenix, have been seized upon by investors looking to make long term profits by turning foreclosed homes into rentals. However, the danger is that as prices rise, some investors may look to cash in on their properties instead – but will there be enough non-investor buyers to support them?

According to the National Association of Realtors, there has been an increase in housing affordability for those who are able to obtain a mortgage. Lawrence Yun, an economist for the Association says “Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 likely will be the third best on record in terms of household buying power.”

In spite of this optimism many people still face difficulty in qualifying for a mortgage, and every month 83,000 new families entered the foreclosure process which means roughly 1,000,000 families are entering foreclosure every year. The pressure on Washington to help ailing homeowners means guidelines which have been a mainstay for years are taking effect.

Chris Apodaca, a California mortgage broker for Broadview Mortgage says “It’s an interesting phenomenon because three or four years ago these people were losing their homes. Now they’re out shopping for a new home. It wasn’t swift and sweeping legislation that did it, simply a matter of perseverance. These folks waited three years and now they can buy again.” Apodaca is targeting those who have found themselves being dragged through the mud during the recent economic crisis and was asked whether or not these people should trust banks again. His reply was “We’re seeing a cautious optimism. The industry has really shifted with the tightening regulations and strict licensing laws. Home buyers have a clearer path to recourse should they be wronged. We as banks know that there are serious ramifications for banks who violate the law.”

Apodaca writes for consumer education website findmywayhome.com which gets numerous inquiries from people who want to ask questions, get updates on legislation or who simply wish to share their stories. Many of these people feel they have been wronged and are angry, but Apodaca recommends they plan for their future and gain empowerment through education. People who lose their home through foreclosure are eligible to purchase again three years after the foreclosure is finalized.

The next twelve months should see yet more improvements in the nation’s housing markets, propelled by record-breaking low mortgage rates and improving unemployment statistics, according to several real estate experts.

Steve Storti, Prudential Fox & Roach REALTORS’ senior vice president of marketing, told the Philadelphia Inquirer that by the time we look back on 2012, many people will see it as a transitional year:

“Just as you can only declare a recession after the fact, maybe we’ll be able to say this is when it changed over.”

Storti cites the fact that home prices are on the up across the nation, and most markets are expected to see this trend continue for the near future at least. Phoenix, Arizona, which was one of the hardest hit markets in the housing crisis, has seen home prices jump by an incredible 21.7% over the last twelve months. Meanwhile, the National Association of Realtors said that nationwide, sales of previously owned homes soared by 5.9% in November compared to the previous month, with sales increasing by a whopping 14.5% compared to November 2011.

One of the biggest factors behind these rising prices is thought to be the decline in inventory. Across the nation, inventories have fallen to just 4.8 month supply on average, the lowest level since December 2011.

Another area showing promise is that of new home sales. Last month, total sales of new homes reached their highest level in two years, while the median sales price rose to $246,200, up from $237,500 the month before. However, IHS Global Insight warns that while the new home market is improving, it still has a long way to go before we can reach what is considered a ‘normal’ level of sales, and will not likely do so until 2015 at the earliest.

Main image © SVLuma – Fotolia.com

Image by paparutzi via flickr.com

The housing market has many moving parts, and the various parts benefit from good housing news in various ways.

For example, the National Association of Realtors are known for their ability to spin a positive report for housing from virtually any data, no matter how negative it may appear.

Witness the 2008 housing crisis. NAR Chief Economist, Lawrence Yun states in May of 2008 in Realtor Magazine, that “the housing market would begin to recover later in the year”. Of course we all know that by the end of 2008 the housing market was well on it’s way to a slump and foreclosure crisis that would surpass even the great depression of the 1930′s, and lead to a banking crisis which we are still working through today.

I’d say that Yun’s 2008 prediction was a “trick” not a “treat”, and was clearly an attempt to put a happy face on a very depressed housing market that was to get much worse as the months went by.

Just a year or so earlier, Yun had replaced former NAR Chief Economist David Lereah, who wrote a now infamous book entitled “Why The Real Estate Boom Will Never Bust” in 2007. The book proved to be a big “trick” that ultimately destroyed Lereah’s credibility as an expert on the housing market.

By now, most observers of the NAR put little stock in their ability to accurately predict anything beyond a continuing recovery in housing, no matter what else is actually happening. They believe that good housing news is always in the best interest of their membership, in spite of the fact that the NAR’s missteps before and during the housing crisis have done significant damage to the credibility of their members and the real estate profession in general.

Down on the trading floor at the NYSE, home builder stocks improve significantly when news of an imminent housing recovery makes the major media outlets. Good news on home sales virtually always results in a stock price bounce for home builders and other public companies that benefit from an improved housing market.

Wall street has now moved from creating mortgage backed securities, CDO’s, derivatives and other financial instruments that nearly brought down the entire economy, to also buying up billions of dollars worth of foreclosed homes. What was once a business that belonged to “mom and pop” investors, small businesses and entrepreneurs has become the latest “trick or treat” project for big investment companies.

Using funding from the likes of Citibank and other housing savvy players, with access to billions of dollars, Wall Street is out to buy up as many of these properties as possible, so that the income stream from rents can be securitized into a new form of housing investment. This is the ultimate “treat” for the entities that have already “tricked” the housing market. They certainly have a vested interest in the good news of a housing recovery. A public perception that housing prices are going up will play right into their investment strategy, in allowing them to buy at 20 cents on the dollar while they sell at 80 cents or higher.

Ultimately, the folks who have the power to influence the news about a housing recovery, are also the ones most likely to profit from that good news.

While NAR notes that most appraisers are professional and return fair valuations, there is a trend toward appraisals falling behind market conditions. Also, changes in recent years like valuators who aren’t appraising homes in their area and don’t have local knowledge of the market or access to all data, bad comparisons, and excessive lender demands, are all contributors to the problem.

Of the Realtors surveyed in September, 11 percent said a contract had to be cancelled because the appraised value came in below the agreed-upon price by buyer and seller. Another 9 percent said a contract was delayed due to appraisal issues, and 15 percent said their contract had to be renegotiated because the valuation came in low. In addition, the turn-around time by appraisers and lenders is delaying closings.

“Though the real estate recovery is taking place, the combined issues of stringent mortgage lending requirements and appraisal frictions are hampering otherwise qualified buyers from purchasing a home in a timely fashion, and in some cases are preventing them from buying at all,” said NAR chief economist Lawrence Yun.

Another component of the problem is that appraisers are comparing foreclosures, short sales and run-down properties with normal-condition homes. NAR says a normal foreclosure is sold for about 20 percent less than a similar home in good condition. A short sale generally sees about a 15 percent cut. Some appraisers are required to use 8-10 properties as comparable properties, which makes it extremely likely that foreclosed or distressed properties will fall into the comparable sales.

“In the meantime, buyers, sellers and real estate agents need to be aware that there are problems with some real estate appraisals, but also be aware of their rights to communicate with appraisers and lenders about errors or concerns with individual valuations,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami.  “In some cases, a second appraisal may be justified.”

© Rob – Fotolia.com

In October, five winners will be chosen from the 10 finalists named below and will receive a $10,000 grant for their particular community cause. They will also receive paid travel expenses to go to the 2012 REALTORS® Conference & Expo in Orlando, Fla, where the awards will be given. The national media attention they and their cause receive goes without mention…

The “honorable mentions” won’t go home empty-handed, however – they will each receive a $2,500 grant to take home to their community.

NAR President MOE Veissi, broker-owner of Veissi & Associates, Inc. out of Miami said, “Realtors® are integral to a successful community. The Good Neighbor Awards remind us of that and recognize NAR members who spend their time and energy to improve the lives of those in need. I am proud to honor these 10 Realtors® and help them grow their efforts so they can help even more people through their selfless work.”

The finalists as listed by NAR:

Rocco “Rocky” Balsamo, The Rocky Balsamo Real Estate Group/Long & Foster, Princeton Junction, N.J.

Balsamo is founding board member and volunteer executive director for Center for FaithJustice, a nonprofit that promotes volunteerism among teens and young adults. CFJ runs summer day camps and sleep away camps, as well as other year-round workshops for schools and churches. Last year, more than 900 teens volunteered more than 20,000 hours in local charities and spent a similar number of hours in education classes.

Charlene M. Brennan, Strano & Associates Real Estate, Fairview Heights, Ill.

For 17 years, Brennan has been dedicated to helping serve the Rotary District 6510’s Belizean Children’s Program. She travels to Belize once a year with physicians to identify children who will come to the U.S. for orthopedic surgery. She photographs patients, coordinates their travel, and recruits host families to care for them. While they are in the U.S., she coordinates their medical care, testing, and physical therapy until they are ready to return home to their families in Belize.

Georgia L. Butterfield, Legacy Real Estate & Associates, Fremont, Calif.

For 18 years, Butterfield has led the nonprofit Adopt An Angel, providing holiday gifts for more than 8,000 of the country’s most needy children. She helped provide gifts for 800 children in 2011 alone. The children, who are living in group homes, shelters, foster care or low-income homes, make wish lists of three gifts. Butterfield finds people to buy what’s on the list and procures donated warehouse space, and recruits volunteers to shop, wrap, tag and deliver the gifts during the holiday season.

Michael Ray Campbell, Broker Associate, Coldwell Banker Residential Brokerage, Tucson, Ariz.

Campbell is president of the nonprofit Hearth Foundation, which provides transitional housing for low-income families, typically women with young children. He is credited for reorganizing and stabilizing the organization, strengthening the board, and creating effective partnerships with other organizations to provide services to the residents. Campbell recently won a $720,000 grant, which will allow the organization to make much-needed renovations to their apartments.

Regina “Ginger” Dowdle, Sunrise Realty & Development, Statesville, N.C.

Dowdle and her husband founded The Shepherd’s Watch Ministries, which offers summer camp to the community, as well as a year-round residential program for at-risk youths ages 13-18 in foster care, on their 60-acre farm. The residential program focuses on teens who will likely age out of foster care without being adopted. The goal is to teach these youths much needed skills to help prepare them for independent living. The Dowdles have foster parented more than 20 youths since 2005, adopting two boys with another adoption in process.

Ortrud “Trudy” Harsh, Associate Broker, Long & Foster, Fairfax, Va.

Harsh founded The Brain Foundation in 2003 to address the growing need for affordable housing for mentally ill adults who might otherwise be homeless. The foundation has since purchased six homes that house 24 adults with brain diseases like schizophrenia, bipolar disorder or chronic depression. She has formed a successful partnership with another nonprofit to provide residents with services that allow them to live independently. Her model has been copied in Florida and she frequently mentors others who are trying to create similar programs.

Geoffrey W. Lavell, Better Homes & Gardens Real Estate-Desert Properties, Henderson, Nev.

Lavell devotes hundreds of volunteer hours to the Nevada Childhood Cancer Foundation. A survivor of childhood cancer himself, Lavell is a 15-year volunteer and co-director of Camp Cartwheel, a summer overnight camp for children with cancer or other catastrophic diseases and their siblings. He also leads a puppet show program that travels to schools to educate children about these illnesses and the importance of welcoming back a child who is re-entering school after a long illness.

Patti M. Miller, Tierra Antigua Realty, Sierra Vista, Ariz.

Miller is founder and president of Real Wishes Foundation. Since 2006, the organization has granted home repair wishes for the elderly and disabled as well as other wishes throughout their community.  Miller sprang into action during recent Arizona wildfires and flooding, collecting $1 million worth of food, clothes, and places to stay for victims who lost everything. The foundation, which is supported by the Southeast Arizona Association of REALTORS®, also distributed $130,000 in donations to victims to help pay for losses.

Kathleen Peck, All in One Realty Group Inc., Naples, Fla.

Peck cofounded Lighthouse of Collier, Inc., in 2009. The organization provides services to help the blind and visually impaired function more independently and improve their quality of life. Legally blind herself, Peck raises funds to provide free summer camp for blind children, counseling and skills training for adults transitioning to blindness, and support for caregivers.

Sally Rudloff, Kane & Associates, Alameda, Calif.

As volunteer president of the Alameda Boys and Girls Club, Rudloff is credited with incredible growth that will allow the club to expand from serving 1,200 children to 3,000. Rudloff led a $10 million capital campaign that built a new 25,000-square-foot youth center. She also launched a dental clinic for uninsured children, recruited math teachers for a new tutoring program, and created partnerships that provide counseling for 50 families.

Do you know of a realtor who should be on this list? Please, tell us about him or her – we’d love to showcase them (and their cause) here at RealtyBizNews!

Housing is still sick © ayelet_keshet – Fotolia.com

Even at the height of the great-recession, June and July home sales represented the peak of the summer selling season. The fact that June sales numbers were the lowest since last winter should be a reason to view housing market fundamentals with caution until we know if this trend will continue for July and August. With builders pulling more permits and foreclosures continuing to mount in hard-hit areas, this is no time to assume that housing is headed for a significant rebound.

When it comes to housing, one of the key fundamentals is employment growth – or the lack of it. The U.S. continues to be mired in an uneven job market. While some locations continue to enjoy a stable or improving job growth picture, there are still many parts of the nation that are experiencing job losses or at best, no job growth.

The fact that unemployment claims have increased recently, combined with the lower sales numbers for June could be a strong sign that things could get worse for housing.

The recent supreme court ruling upholding the “Patient Affordable Care Act” (a.k.a. Obamacare), seems to be having a negative impact on the economy as well. Many employers are holding off on new hiring due to fears over the costs associated with implementing this new program, which carries significant financial requirements for many employers. And the tax increases embedded in this law are expected to have a negative impact on the economy going into 2013.

Mortgage credit also remains tight, with qualifying criteria as stringent ever. Though we’ve still got low-down-payment FHA loans, those loans are still difficult to get, and FHA has been experiencing significant increases in 30 and 60 day delinquencies. If this trend continues, FHA insured loans will become even more difficult to obtain.

But if you’d like some good news, Lawrence Yun, The Chief Economist for the National Association of Realtors has found a way to “wring” some good news out of the June housing report. They are well known for their ability to find good news in any housing data. But the NAR is not known for an ability to recognize fundamental problems in housing, such as in May of 2008, when Mr. Yun and the NAR predicted a housing recovery by the end of that year. (Realtor Magazine, May 2008)

There is little doubt that the underlying economic fundamentals needed to support a housing market recovery are weak at best. Those who have a professional interest in the housing industry should keep a positive outlook, tempered by the reality of the potential for financial calamity just ahead, and plan accordingly.

Of course, all those favorable affordability conditions don’t amount to a hill of beans if lenders remain tight fisted with mortgage money.

Can YOU afford to buy now?

However, in its first quarter 2012 report on metropolitan area home prices, the National Association of Realtors took a look at incomes and home prices, and found that qualifying incomes are well below median incomes in most of the nation, allowing many buyers, who can pass muster at the mortgage counter, to buy a home and stay well within their means.

“Historically favorable housing affordability conditions are making it easier for buyers to enter the market, despite the unnecessarily tight credit conditions,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, FL.

To measure affordability, NAR examined incomes necessary to purchase a median-priced ($158,100), existing, single-family home, assuming down payments of 5 percent, 10 percent or 20 percent, and an interest rate of 4 percent, with 25 percent of gross income devoted to mortgage principal and interest.

The national median family income came in at $61,000 in the first quarter, but to purchase a home at the national median price, a buyer with 5 percent down only needed a $34,700 income. With a 10 percent down the buyer would need a $32,900 income and with 20 percent down, the income drops further, to $29,300.

In an example, NAR cited a buyer in Indianapolis, IN making a 10 percent down payment who would need an annual income of $24,000 to purchase a median-priced home. In Seattle it would be $55,300.

Keep in mind, while the average mortgage interest rate is hovering just below 4 percent some rates are lower still. Erate.com, which tracks a range of interest rates, reported rates on 30-year fixed-rate mortgages hovering around 3.6 percent for weeks.

Of course, such a rate is for prime borrowers with pristine credit and sky-high credit scores, but those borrowers can really cash in on affordability.

“For now, buyers are facing an extraordinarily advantageous situation if they can obtain a mortgage,” said Lawrence Yun, NAR chief economist.

For those who can buy now, things are looking good!

And there’s the rub. It is a big “if.”

First-time buyers, who can qualify for a mortgage, are taking affordability to the bank.

They accounted for 33 percent of homes purchased in the first quarter, up from 32 percent a year ago.

Investors also know an affordable deal when they see one.

NAR reported investors, drawn by bargain-basement prices, make up the bulk of cash purchasers, and accounted for 22 percent of all transactions in the first quarter, up from 19 percent in the fourth quarter and up from 21 percent a year ago.

The share of all-cash home purchases in the first quarter was 32 percent, up from 29 percent in the fourth quarter. All-cash deals accounted for 33 percent in the first quarter of 2011.

American Enterprise Institute

Like a cancerous tumor that just won’t go away, another housing crisis is growing ever larger. It’s a debt tumor, fed by the blood that flows in the form of government insured mortgages which are in essence nothing more than taxpayer backed guarantees for Fannie, Freddie, USDA, and FHA, to name a few.

This article quotes heavily from the work of Mr. Edward Pinto, A Resident Fellow of The American Enterprise Institute, and a former executive of Fannie Mae. The entire 15 page report is available here if you’d like to read his detailed analysis. (Thanks to Mr. Pinto for kindly providing me with a copy of his testimony.)

Mr. Pinto has an excellent insight into the problems inherent in government insured mortgage programs, the “politicizing” of U.S. housing policy, and how this led to the first housing crisis. His analysis of what he has termed “the government mortgage complex”, demonstrates why the proposed government solutions to the current crisis are not going to solve the problem, but will merely add another housing crisis to the existing one. He also demonstrates why the current crisis continues to drag on, and shows that it’s largely because of misguided government policies and political deal making that fail to address the underlying causes, while attempting to please a variety of special interests, from “affordable” housing advocates and the finance and banking industry to the real estate industry itself.

Edward Pinto

As a long time participant in the residential real estate industry, I’ve witnessed the development of many of the programs highlighted in Mr. Pinto’s testimony to the committee. I was a member of the National Association of Realtors at the time they were lobbying for expansion of FHA, a real estate investor when Option-ARM’s were invented, and I’ve seen people buying $300,000 houses with government insured loans, then using sheets for curtains and card tables for furniture. I’ve also had a close up view of the damage that has been done by well meaning government policies that had major unintended consequences. And watching the government repeat the same mistakes again makes me cringe, knowing that the massive debt involved could render a fatal blow to the U.S. economy.

Here are a few of the essential details given in Mr. Pinto’s testimony:

“The failure of the housing market to recover is the direct result of two errant policy initiatives.
First, broad affordable housing mandates that started in the early 1990s along with other government policies drove an unsustainable home price boom. This was due to an unprecedented loosening of loan underwriting standards—a core goal established under HUD’s 1995 National Homeownership Strategy.

Once the housing market collapsed, many of these same supporters of loose lending effortlessly switched gears and undertook a multi-year effort to delay and prolong the market clearing process. Much of this effort has focused on rewarding millions of borrowers who overleveraged their homes. Neither massive amounts of government spending nor innumerable government interventions have led to robust economic growth or hastened a housing market recovery. In fact evidence is mounting that a recovery has been impeded.

While the failure of these twin initiatives should be a cautionary tale, beware. Their supporters are now moving on to promote the view that housing finance is a civil right requiring equal outcomes and therefore loan underwriting standards are inappropriate. Many inside HUD and the Justice Department share this view. This will turn housing finance into yet another entitlement, this time controlled by the Government Mortgage Complex.1 While purporting to help low- and moderate-income borrowers and minorities build wealth through home ownership, it will instead place them in harm’s way. The FHA wants to expand its lending practices that are so destructive to borrowers and neighborhoods alike.”

Politicized Lending Phase 1: Affordable Housing Mandates and the National Homeownership Strategy

“The first policy—the decades’ long effort to loosen underwriting standards—fomented the crisis and immeasurably deepened it. The following testimony from 1991 before the Senate Banking Committee is revealing:

“Lenders will respond to the most conservative standards unless [Fannie Mae and Freddie Mac] are aggressive and convincing in their efforts to expand historically narrow underwriting.”

Testimony of Ms. Gale Cincotta representing National People’s Action before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on February 28, 1991.

“About five years before this testimony, I was an executive at Fannie and met with Ms. Cincotta. I advised against asking Fannie to undertake a broad national program of expanded underwriting standards and warned that it would be no more successful than the failed efforts by the FHA that Ms. Cincotta was complaining about.

Think for a moment about the full import of this testimony. First, that Fannie, Freddie and lenders generally had conservative standards in 1991. Second, Fannie and Freddie would need to be aggressive and convincing in loosening their standards. The very next year, Congress passed the misleadingly named “Federal Housing Enterprises Financial Safety and Soundness Act of 1992”. The race to aggressively loosen lending standards was on. In the years following, numerous others policies promoting so called “flexible and innovative” underwriting standards were adopted, led principally by HUD. These include the National Homeownership Strategy, expansion of CRA, and HUD’s Best Practices Initiative.

The result was first created a boom in and then the collapse of the housing market. Excessive leverage as evidenced by reduced down payments as shown in Chart 1 was a leading factor in the boom.”

“…For proof, [that such destructive policies are still in place], we need look no further than the Fed’s approval of the recent acquisition of ING Direct by Capital One Financial Corporation. It is well known that mega-bank deals require “concessions to win the support of consumer groups and community activists and the Cap One-ING deal was no exception.”4 Capital One committed to a $180 billion CRA commitment. This included an agreement to originate FHA loans to borrowers with FICO scores as low 580.5 My estimates are that the FHA’s recent loans with a FICO score of 580–599 have an estimated claim rate of nearly 30 percent.”

“Rather than avoiding such destructive lending, the FHA is planning a major expansion. It is projecting that by FY 2015 about 44 percent of its 30-year term purchase loans will have a FICO below 660, nearly double the rate in FY2011. This policy has the potential to be dangerous for both borrowers and neighborhoods…”

It’s interesting to me that while there are numerous housing market and investment analysts such as Edward J. Pinto of The American Enterprise Institute, Laurie Goodman at Amherst Securities, Peter Schiff of Euro Pacific Capital, and myself, who have been warning for years of problems with current housing market policy, the special interest groups continue to be unaware of their own short sighted policies. With the broader mortgage market almost entirely funded by government insured loans now, an expansion of loose underwriting standards, as detailed in this report, will almost certainly result in more severe pain for the housing industry.

Yet, the entire real estate industry seems to be like a cancer patient on morphine. Oblivious to how close we are to death, as long as we can do everything in our power to numb the pain.***

Editors Note: More specifics to come in Donna’s next article, as she provides details on how government insured loans are expanding “subprime lending” at taxpayer expense.
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Donna S. Robinson is a 16 year veteran of the real estate industry and a staff writer for Realty Biz News. She is an active real estate investor who also provides coaching and consulting services to individual investors, investment companies, real estate agents and brokers. You may join her email list on her website at www.RealtyBizConsulting.com or call her office at 888-915-9968.