Tags: Senate | housing | homeowner | mortgage

Senate Progressives Take Last Look at Housing

By    |   Wednesday, 10 Dec 2014 08:09 AM

The Senate Banking Committee's Subcommittee on Housing, Transportation and Community Development, chaired by Sen. Robert Menendez, D-N.J., held a hearing Dec. 9 titled "Inequality, Opportunity and the Housing Market." Beside Menendez only Sens. Jeff Merkley, D-Ore., and Elizabeth Warren, D-Mass., attended.

This is the last hearing the subcommittee will hold under Democratic management for the next two years, so it gave them a chance to explore issues of interest to them, especially with respect to Menendez's home state. It was flawed in that in repeated the mistake of overselling both the cult of home ownership and home ownership as a path to wealth given the very statistics cited at the hearing as to how much homeowners, particularly minority homeowners, lost when the bubble burst.

However, some of the issues the Senators raised offer the possibility of cobbling together a modest bill that Republicans might support. Some of the reform ideas would not require legislation and could be put into effect if lawmakers could get the attention of bureaucrats, which is an inherently difficult task.

All four of the witnesses were very authoritative in their presentations and have long experience in mortgage finance. Wayne Meyer, president of New Jersey Community Capital, which is a Community Development Financial Institution (CDFI), in effect structured to finance the reclamation of failed housing deals. It has brought underwater housing wholesale to take advantage of low interest rates and wants to do more of this.

Meyer provided statistics showing that 6 percent of homes in New Jersey are in foreclosure and another 9 percent seriously delinquent, the worst circumstance among all the states, as New Jersey was hit by both the housing bust and Hurricane Sandy. He complained that private investors are winning too many deals and hopes to leverage funds extracted from banks in settlements with regulators.

Mabel Guzman, a realtor who chairs the Conventional Financing and Policy Committee of the National Association of Realtors, represented that powerful lobby in the best possible light. For one thing, she pronounced her name with a Spanish accent and then delivered her statement in totally unaccented English, which must be an enormously valuable skill in dealing with a diverse public in Chicago. She crisply presented ideas for reforming fee structures and underwriting practices that may needlessly make it more difficult to restructure failed mortgages.

Julia Gordon, director of Housing Finance and Policy for the Center for American Progress, put forward some more alarming statistics, including that in the worst zip codes in the country as many as 75 percent of mortgages are under water. She criticized Fannie Mae and Freddie Mac for going too far in promoting revival of the private-label mortgage securities market through a model based on high fees, and she offered her own list of issues to examine.

Finally, Deborah Goldberg, special project director of the National Fair Housing Alliance, decried the poor condition of foreclosed housing in minority areas versus white areas, because poor maintenance compounds the original damage and radiates into the surrounding communities.

In response to Goldberg's point, Menendez suggested that an Inspector General should take a look at these maintenance practices, because they make the properties less marketable at the end of the day, and the practices have to be purposeful by the owners at the end of the day.

(Archived video can be found here.)

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Robert-Feinberg
The Senate Banking Committee's Subcommittee on Housing, Transportation and Community Development, chaired by Sen. Robert Menendez, D-N.J., held a hearing titled "Inequality, Opportunity and the Housing Market." Beside Menendez only Sens. Jeff Merkley, D-Ore., and Elizabeth Warren, D-Mass., attended.
Senate, housing, homeowner, mortgage
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2014-09-10
Wednesday, 10 Dec 2014 08:09 AM
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