Week in Review - Congresswoman Susan Davis

Week In Review – What’s Going on Now

1) Last week I helped teach a Loan Modification Seminar at the San Diego Association of Realtors. My class outline was uploaded to macplan.blogspot.com

2) Last Saturday I, along with Janelle Riella the San Diego Association of Realtors Director of Government Affairs and a couple of others, met with Congresswoman Susan Davis in her San Diego Office. Here are the results of the meeting:

A) I told her about how self-employed people are being left out of the buying and refinancing market because the Federal Reserve Rule and other federal and state legislation that include the Ability to Repay provisions, meaning the only way self-employed people can get a loan is if they don’t write off any business expenses so that their gross income is the same as their net. These underwriting guidelines are a de facto tax against the small business person and takes the self-employed person out of the potential buyers pool.

B) I explained to her that the effects of not having loan programs available to upside down borrowers. Those people are generally stuck with no good options right now, except short sales, foreclosures or loan modifications which in most cases don’t make sense. People that are upside down have effectively lost their freedom to move about….they in most cases cannot buy another property. This, along with the inability of self-employed borrowers to quailify, shrinks the potential pool of buyers which is ultimately bad for the market. She said that she, along with Barbara Boxer, has written a letter to the appropriate people to get the 105% LTV limit in the Obama plan raised to 125%. I told her that that was a good start, however the Obama plan will have a hard time working in the first place because of mortgage insurance issues.
The bottom line is that I suggested some solutions to the problems such as having the GSE’s provide warehouse lines to the non-bank lenders, developing a program that would allow upside down borrowers to buy another property but carry their other debt with them so that their will be no moral hazard but that would allow potential upside down sellers to get out of their homes without bad marks or foreclosures on their records, institute a mortgage insurance premium program within the GSE’s (much like FHA MIP or the VA Funding Fee) to make up the difference and the slack that the currently under-capitalized Mortgage Insurance companies are causing and unable to pickup, institute a program to roll the non GSE Loans into Fannie and Freddie on a Streamline program based on previous mortgage payment history (the loan is a performing asset).
Congresswoman Davis was very sincere about us putting these and other solutions down in writing and said that although she was not on the House Financial Services Committee she knew people that were and she said that she would make sure they got our list.


3) Status of the MACPLAN – Real Mortgage Reform: We gave Susan Davis the initial draft of the plan and are working on another version with all of the solutions that I have collected. There obviously has been a lot going on with the Treasury, Fed and Administration so any plan that we finalize will have to work under the current political and regulatory climate. I hope to have something by the end of this week…then have a meeting to discuss it….vet it out….then proceed with the final version.

4) Yesterday I was invited to a Real Estate Roundtable hosted by George Chamberlin at the San Diego Daily Transcript with economist Dr. Alan Gin, economist Alan Nevin, and one of our own mortgage brokers in San Diego Mark Goldman, among others. For more on that go to www.sddt.com. It was an honor being invited and participating with that group of people.

That is all I have for you now. Have a good one!