Today’s Realtor Magazine news feed had four headlines (among others) that caught my attention. On the surface they seem to be innocuous little articles, but when you read the stories and think about what is being said or suggested they bring some further thoughts to mind.
1. Housing Can Be 'Key Engine of Job Growth' – This story is basically about the National Association of Home Builders lamenting the fact that credit has tightened up so much that they aren’t build houses. They are claiming, as one might expect that if the current credit crunch were eased the housing industry might be able to lead the country out of its economic doldrums.
I’m not sure that this isn’t one of those chicken or egg conundrums and is certainly is a view that is way to simplistic. Even if there was credit available to build and maybe even to buy there is still a fear factor hovering over potential buyers that is driven more by job concerns.
It’s prophetic that the story that this Realtor Magazine article is based upon is titled “Do not harm…” and makes the argument that many of the Federal housing and homeowner bailout programs so far have not followed that caution. They have, in fact caused more problems (harm) than they have helped.
2. Bill May Help Home Owners Tap Retirement Accounts – This story really has some really bad possible future consequences that are not pointed out. On the surface it sounds initially like the right thing to do to let people use their retirement savings without a withdrawal penalty, which is its big benefit) to fund their current mortgage obligations. Sounds reasonable initially, but, you don’t have to think about it for long to see that allowing (even encouraging) them to strip retirement accounts now just means that they will be standing there a few years from now, hat in hand, asking what we’re going to do to help them out in retirement. It seems to me that it might be better to encourage distressed homeowners to bite the bullet now and downsize into a situation that they can afford, without decimating what little savings they have.
3. Lawsuit Accuses Banks of Cheating Veterans – This story is about practices that are so wrong on so many levels that these banks ought to have the book thrown at them. It is no surprise that the biggest three mentioned in the story were Bank of America, Chase and Wells Fargo. These are the same big-3 that are front and center in most of the other current cases and law suits over wrong doing and possible fraud.
Perhaps this time they’ve finally dug a hole that they can buy their way out of with political contributions. All 30 of the banks referenced in this investigation need to be punished big-time if these allegations are proven. No wrist slapping this time, get out the big paddle and head for the outhouse.
If there’s one thing that I don’t want to see it’s yet another Senate or Congressional committee hearing were the CEOs of the big banks are dragged in for a public flogging and then walk away whole. That is just political theater designed to give each political hack their 5-10 minutes of TV exposure. It would be appropriate if those hearings are held to just use cardboard cut-outs of the big bank CEOs sitting at the table.
4. More Kids Turn to Parents for Mortgage Help – This bank of mom and dad story would fall into the cute category if it weren’t for the same issue as the Retirement Accounts story above. In this case it’s the kids who are asking mom and dad to strip their savings (many times their retirement savings) so that they can get a house before they can really afford one. Obviously the same issues will eventually come up, except in this case at least mom and dad should be able to move into the nice home that they helped junior or princess buy with their retirement money. Just make sure they get that extra bedroom or in-laws suite.
This is something that retirement planners and financial advisors all usually advise against (unless mom and dad have lots and lots of money). It’s also something that, while well meaning, can add so much tension to the family situation that family breakups might result.
I’ve put the links below to the source stories upon which Realtor Magazine based their articles.
1. Based upon Do no harm…
2. Based upon an article at Housingwire…
3. Based upon a Washington Post article…
4. Based upon an article in USA Today…
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