There's some things that are forever timely...
Speaking with many folks, whose experience outweigh mine, does much to help me learn in this business. When you couple that with the fact that I try to digest everything I can written about this industry (past or present)... it makes me a tad smarter about the industry than the day before.
As expected, there have been many articles written on the government's bailout of Fannie Mae and Freddie Mac. Of course there are different takes, opinions, facts, & misleading information... in this day of 'free market journalism' and off the cuff thoughts and perspectives.
What I'm not going to do here is hang my experience on the wall and tell you this is the light. What I'm not going to do in writing this is give a concrete & undebatable answer. What I will tell you is that the savvy exchange of ideas may lead us not into the capitalistic promised land per se (at least right away), yet may just allow change we can all touch and feel... one moment at a time. Before I go on, I know the word 'change' is thrown around like a pigskin on Sunday... but in good confidence I assure you... WE need to take this industry back!
People have expressed on many levels and in many political circles that they want less government in our lives. Well, as of Sunday, they are a tad bit more prominent in our lives than they were... aren't they? When the government stepped in and paid for the crisis going on in Fannie & Freddie, the consequences will probably be that the United States Government, who flipped the bill, will be passed on to the U.S. taxpayer. Color and convict me wrong, if that doesn't happen.
What's done is done. Here's a few things I feel will help move forward in a more direct, appropriate, and positive direction... the very reality we are living in:
- Real Estate is local. Simple example, what's going on in the market in Portland, Oregon may or may not shadow what is going on in New Orleans, Lousiana. It even breaks down to neighborhoods. You may find one block where homes are selling for $150,000 and walk two blocks down the road and find homes selling for $350,000. That's why it's so hard for a major national machine like Zillow to be an accurate barometer of your home's worth. It's a neat tool and you get a cool satellite image of your house, but take the property worth with a grain of salt. I believe that Credit Reporting Agencies should also be local! While that's not a cheap proposition, I think it is an appropriate response to yet another tool that now has become a tail wagging man's best friend. Before my time in this industry, Credit Reporting Agencies were local and any inaccuracies or problems could be fixed with a phone call to a local office that was answered by (and get this novel concept) a LIVE person. Try getting through to a live person if you call Equifax these days. If credit & credit scores are going to control the lending atmosphere in the way that it is currently controlled, make them do it from a local level... which ensures a greater chance at accuracy and intimacy.
- If you want to regulate, do it consistently. What's good for the goose bank is good for the gander broker. Do you realize if one is Federally Chartered (in they have the label of 'Bank' in their palms), they fall under different rules than locally based lending institutions? I'm not spilling sour grapes here, I'm drinking grape juice. It ain't tasting so good. I don't mind and even advocate licensing and full disclosure and transparency. You'll get that from the broker, but not the banker. If you are going to regulate, do it consistently and across the board. I dare one 'banking entity' to debate me on this one. I'll go work for a bank right now and express the same opinion. With inconsistent laws and regulations, comes inconsistent delivery of product and service to the very people that make up our capitalistic market... Consumers!
- How about appraisers, giving an educated guestimation on the worth of your home? Do you really want a National Appraisal Company who doesn't intimately know your particular area... stapling a value to your property? Nah, not me. Give me that educated guestimator who is local and truly knows the area. Back to Ma & Pa shops, you pay for service and a familiarity in the area that their service is involved in.
- Give me lenders who are more focused on local areas. Give them responsibility and accountability to the money they are lending to folks. While most of the mortgage money is bought by Wallstreet, let's give accountability a chance. Tell Wallstreet to take a backseat to local entrepreneurs who can profit by being a monolithic entity in their area. I know many folks with a lot of money who probably would like this idea. If you have no real interest in the transaction, you have no real accountability! That's the problem. You want a bail out, give me a break. Failure is a potential reality in anything you do in this world. As you let them potentially reek profits and success, let them also reap the very opposite if it comes to that. That's Capitalism! It's the same risk every small business takes when they decide to throw caution to the wind. When that wind blows, which it will, you either adapt or die.
To Mr. & Mrs. Government,
Let us all, adapt or die.
Sincerely,
A Local Kind of Guy
If you want change in the Real Estate Industry, go Local across the board. We are a country within a country. We are people within the people. We need to take our industry back, one community at a time. National Companies have their place, but they've really gotten into waters where they are way too mainstream. I don't believe that to be healthy in many ways at all. Our government serves a purpose, to protect us... not to own us.
Real Estate has almost always been local, I think Lending should be the same. All thoughts, agreeable or not, will be addressed. Like the first pitch at your preferred stadium, I'm throwing this out there...
Same song, different pitch and time.
Parked...
While I cannot pretend to be an economic expert by any stretch of the imagination, I think that this is a band aid for today and gonna be a problem down the road. We already have FHA and HUDand that has been fine, I have been a big fan of FHA. Who is going to drive the Fannie/Freddie bus directly? Government is getting bigger and bigger, I think it is called socialism and you know what comes next . . . We have a problem in our country, we don't want to be accountable for our problems and want someone else to fix it, but in the end we are all going to pay for it as tax payers - I can hear the first speech on why taxes are being raised now. .
Interesting. I can see a case for a broader credit reporting model... and for a local version. But, the ideas are interesting... above my pay grade, though.
Hear, hear!!!! 3 cheers....those national lenders just don't get it. I cannot see the benefit of more government. The government practically owned Countrywide for a while and CW was the largest national lender. More is not good, but sometimes the government needs to get involved more. But to completely take it over? I'll stay with a local or regional bank b/4 ever hooking with a national.
My Jennifer - Just don't do the 'double space' thing.
Sis - I don't necessarily think it has to go, I just feel that local stuff and implementation is an important part of the solution at this point. I don't think you can sit back and forget what got you here, I DO think we've forgotten that from year to year and decade to decade. 'Back to your roots' is rarely a bad way to travel... in my opinion.
Audrey - Funny you should mention the catchphrase of political rhetoric, "Socialism." Let's be honest, I hate starting a sentence with those three words but you did open the bag. Socialism is a bad thing and we have the majority of Congress being democratic and the other part (figure heads) of the administration are Republican. This is what I don't get. Folks on both sides (Democrat & Republican) say they want less government and yet this goes through. We have more government! Take what works and makes sense from either side of thinking and use it. Take what doesn't work, throw it to the wind and don't use it. If a tornado comes along and blows it back in your face, take that punch and fight back. I don't want or need any more control of our lives and economy!! Okay, I'll play though. Both parties are practicing socialism at their discretion and reward. *Sigh* We don't don't need more government, we need more of this!
Lane - Above your pay grade, eh? Smart ass, I am voting but not for either of the chosen two. If that is a wasted vote, I'm cool with that. I'm tired of wasting my vote on the perception of the lesser of two evils. I would rather waste my vote on someone I believe in, whether the reality of them winning is suspect at an absolute best.
Larry - The government now owns the lending instituitions, on a larger scale than they did. Call me cynical, but that's not a good idea. It's not about FHA or Countrywide or ... forget that. Read your comment and know what you promote. We have entered the realm of control, and most of us like it! If we are getting paid, most of us are pretty cool with what is going on. Sorry, I like ya, but as I fit the hairs behind my ears I do question the motives of those of us who are left. The FHA is a wonderful product for some people, but ANYONE promoting that as the be all-end all...well, they will proven to be mistaken. To be transparent, that's coming from a guy and entity that isn't FHA approved, and that doesn't mean I'm wrong. I'll let time tell that tale.
Absolutely superb sweetie! I read this and know that dispite what I may want for you, you have the mind, the passion and the vision for politics. Local is the common thread that gives meaning and balance to any system - especially those you've so astutely identified here. It's about relevance, it's about being connected to a common outcome where the value of each result has an impact on every participant. It's the underlying framework for all great societies. But I'll be careful here because I know where this idea can lead.
I love local - I live local. I buy from primarily local vendors, eat locally grown food, and support keeping as much $$ in my local community as I can manage. Sadly, that which is most precious to me - my soul's beautiful and perfect counterpart... is not local :(
Do you have the cure for that?
I'm not sure, Jennifer. The retort is easy... the implementation isn't so much. I'm the counterpart and I wonder wildly if that will make the grade. I have the cure but I'll never smile when I kill.
uh....that 'Localism Featured' thingie would be me... http://activerain.com/blogsview/594634/-LOCALISM-FEATURED-and
Jason, with the Fannie Mae and Freddie Mac too many mortgages nationally are packaged up to them and despite the public vs. private debate over this Fed buyout action, I think it was the right thing to do for stability in the markets. I don't think this was a local issue. Real estate is local but the economies out there are increasingly not even national anymore, but global. The Chinese own us these days with them buying up the debt. It truly is "The Land of Confusion" no doubt about it.
Rich - You know what I mean... I'm pretty sure. Speaking of songs, you're pretty good. You got things under control. You just put a link to your post as a comment on my post, I believe that goes against the guidlines of AR, my friend. (I wish you could see my facial expression right now) On a serious note, I love ya... and what you do around here. More importantly, I have an itch that needs some scratching. It ain't localism, it's that 'making people smile' thing that is pretty important through the thick of it all. You have proven to do it well on all accounts. Bring on that freaking cowbell!
Gary - You make a good point, we live in a global economy. We have for quite some time. I think this is a Local issue though, starts with us before we can sit here and try to dictate the rest of the 'other' stuff going on. Perhaps that is the bottom up philosophy, which probably won't work because that entails personal responsibility. If it doesn't work, then try the top down thing. That probably won't work either. It's an inside-out sort of deal...
You can make the back to local argument for not just Real Estate but for almost everything else in the country too. Local banks, utility companies, mom and pop shops etc have all been replaced by giant corporations. Is this good or bad? Depends on your point of view (Walmart?). But you can certainly make a compelling argument either way.
As you point out, there is something to be said for doing business for someone who is local, knows the area and know the customers but this goes against basic economic theories of efficiencies and economies of scale. There used to be a time (so I've heard) when you actually met with the guy at the bank (who was probably your neighbor) and he determined whether or not you were worthy of a loan. Now you call some 800 number and somebody thousands of miles away enters your info in a computer which makes the decision for you. What you may not be getting in friendly personal service, you may be making up for in better products and rates.
As far as credit bureaus being local, its no secret that the lack of friendly, personalized service is part of the reason people are successfully able to delete negative "inaccurate" information from their reports. So localized cra's may actually result in having people with worse credit scores.
I don't necessarily agree with the government bailout but it's really a catch 22. If the goverment doesn't step in, then everyone bitches that nothing was done. Just ask Bush.
Sardi - interesting approach, on the surface, I like, but, will have to ponder it some more.
One thing to remember, things are often run by bean counters now, and to bean counters everything is a "widget".
Michelle - Good points. I read up on the last time something like this happened and was hoping that I could look for and find any hint of the exact way this should be handled. Well, I'd have to spend at least a weekend if not more reading and disecting but I figure the only thing we really can do is adapt. That won't stop me from reading more about it, though:-)
Mike - Definitely something that should be pondered, NOT held as they way or be all--end all.
Jason... I normally vote Libertarian. I have to admit that I won't be this time. But, back to the subject... yep, above my pay grade.
Jason you make some really good points! It will be interesting to see how all this shakes out. The one positive I see so far is the rates becoming more attractive although I suspect that will only last for a short time.
Lane - To a large extent, it's above my pay grade as well... but I do think these are points that need to be addressed and ponder, if not totally implemented.
Bill - Rates have trickled down, probably a market reaction. Time, as always, is the only teller.