Posts Tagged ‘mortgage’

Four Reasons The Housing Market Is On Your Side

Monday, July 2nd, 2012

Recently, on Fox Business, I discussed the state of the housing market, which has been under scrutiny over the past few years. The media frenzy surrounding the housing market has left potential buyers in fear of failure in the housing market when, in fact, there are many attractive opportunities available to qualified buyers. In my latest Forbes post, I examine the four reasons the housing market is on the consumer’s side: interest rates, prices, consumer confidence, and supply/demand. You can read the full article at the link below. As always, I look forward to hearing your thoughts.

 

Qualified Homebuyers, Why Aren’t You Getting the Loan?

Friday, February 10th, 2012

This week I had the opportunity to speak to PBS News’ Suzanne Pratt in our Englewood Cliff’s headquarters about the challenges facing the mortgage industry.  She also spoke with our client Dr. Farnaz Safi, who came to us a few weeks ago after struggling with big banks. While Dr. Safi talked about her experience working with NJCB after her disappointment with a big bank, I shared my views  on mortgage and credit policies and why North Jersey Community Bank is a “Better Place to Be.” You can view the full video below. I look forward to hearing your thoughts…

Life Jackets for Underwater Loans & the Economy

Tuesday, December 14th, 2010

 Millions of Americans are struggling to stay afloat as they deal with mortgages that are technically underwater.  What is missing here is a relatively easy solution that would help boost the economy and provide a life jacket to these homeowners through the use of the government’s balance sheet!

 Approximately one in four homeowners in the United States currently hold mortgages that are technically underwater where the amount they owe on their loan is actually more than their home is worth now, even though the ability to pay is not impaired.

Without much fuss and possibly without any cost to the Treasury, owners with mortgages that cannot be refinanced because the loan to value on their home has dropped to levels below that which a bank can legally refinance, would now be able to take advantage of the lower rates available.

 If the government provided a guarantee and the policy necessary to allow for such a program, many homeowners who currently are making their payments would be now free to refinance and in some cases reduce their monthly payments by 25 to over 50 percent. The program should not permit a government paydown or a cramdown of the loan balance; just the use of its balance sheet to allow the rate to be reset without triggering a now required principal reduction. All the government would be providing is the guarantee on the portion of the loan that is above the normal Loan-To-Value. In the event of a sale, the owner would still be responsible for any shortfall, and the government could add a warrant that if in the future the home is sold for a profit, then the government would share in the profit to cover its exposure.

That release of free monthly cash flow would benefit the economy in many ways. It would allow for:

  • More spending
  • More saving
  • And probably most importantly, an increase in confidence.

 

Banks, likewise, who participate in this program could be given tax free interest income on these type of loans to incent them to seek out and make every effort to find homeowners that qualify. Those incentives should only be provided to those banks that retain the mortgages on their balance sheets in order to give the incentives to the issuing bank, and not some class of disinterested investor. The program could also include State Tax incentives that would reward banks headquartered in the respective state in order to keep all the ancillary benefits that would accrue in the work required to re-underwrite all these mortgages locally.

Banks would hire staff, lawyers would get more work, title companies, appraisers, would all benefit, and local economies would rebound. The additional pressure of contemplating strategic default would be eliminated, and home prices would stabilize.

Removing this amount of uncertainty would greatly improve the economy, and could establish a working framework on which to build the structure of resolving all the defaulted mortgages in foreclosure…The government holds a life jacket, it just needs to use it before more homeowners drown.