Cheaper Senate Housing and Foreclosure Bill Moving Forward
Posted in Market Trends and Projections | By Blair Newman and Dave Emerson | Tags: Senate Mortgage Relief Bill, Southern California Real Estate
It sounds like the Senate may once again prove the more statesmanlike chamber. Word is now breaking that Democrat Senator Chris Dodd and Republican Richard Shelby, with help from their respective Senate leaders, have bridged the gap between the parties and dramatically reduced the projected cost of the Senate’s version of Barney Frank’s massive Foreclosure Relief Bill.
The Senate version is projected to cost a little less than 1/3 of the projected $1.7 billion price of Frank’s bill, according to Forbes.com’s post, which is the most detailed I’ve found yet.
The New York Times quotes Senator Chris Dodd as saying “The bill addresses the root of our current economic problems — the foreclosure crisis — by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes. The bill also establishes a new fund that will help create more affordable housing for millions for Americans.”
From where we sit in on the Los Angeles and Orange County line, the foreclosure crisis may be at least as much branch as root (see “How we got into this mess“).
This more modest version may be the best we could expect, but I still have several concerns. By itself it’s hardly enough to get us out of the mortgage mess Congress, the Fed, and a cast of thousands got us into. (see “How we got into this mess“).
It’s also a great example of our ongoing mantra, “It’s impossible to know what’s going to happen next.” (See “How low will prices go?“)
Ironically, as Senators Dodd and Shelby were announcing their foreclosure progress, April DataQuick numbers indicated increasing sales but dropping prices, as we recently predicted (See “Snapshot from the front lines: One bottom, maybe two“).
It may be that what we’re seeing is the market finding it’s own bottom, as banks price their REOs at prices that are attracting buyers. Unfortunately, inflation seems to be driving interest rates up, which will put more downward pressure on prices, especially combined with all the foreclosures still in the “pipeline.” (See “So Cal April Foreclosure Data Just In.”)
There are a number of things we like in the Senate version of the housing relief bill. On the whole, it seems like a good move that will help.
However, the new challenge to housing, which we think is potentially more damaging than the foreclosure problem, is ongoing increases in long term mortgage rates (see “Oh-oh! We just passed a nationwide bottom!“).
We still think Congress would do the housing market a bigger favor if they worked to reduce the huge deficits that inevitably drive up interest rates. We’d love to see our three Senator/Presidential Candidates work together on a bill to eliminate congressional earmarks and give the next president a line-item veto.
Now that would be real “straight talk,” real “change we can believe in,” real “solutions for America,” and real foreclosure relief!
Tags: Senate Mortgage Relief Bill, Southern California Real Estate
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