According to the president of Mortgage Bankers Association, Mr. David H. Stevens, the US Federal Reserve has employed the most effective economic recovery policy to promote its slumped housing market from the present downturn. He further opined about the stringent lending terms observed by the mortgage lenders that is downplaying all the advantages this bailout program could have provided.
Reasons for the housing crisis
Mr. Stevens provided some of the factors that pushed the housing market towards this crisis:
Mortgage lenders followed a very cautious approach while underwriting loans. This coupled with the demand for high credit rating by the federal housing authorities, was claimed to be one of the major causes for such a crisis.
Borrowers had to go through a gamut of complex federal laws in order to qualify for the mortgage loans.
Fannie Mae and Freddie Mac have been aggressive in holding the lenders liable for any sort of loss on shady illegitimate loans.
Moreover, bankers were made the scapegoat for any kind of trouble due to unscrupulous claims and exorbitant lawsuits filed by the social service communities, states governments and various people. For more information visit: http://www.mortgagefit.com/
On 15th May 2012, the National Economic Council director, Mr. Gene Sperling informed the National Association of Realtor’s about the 3 most pressing issues that needs immediate attention were:
Increasing number of diligent mortgage payers are about to lose their homes due to foreclosure.
Increased supply of foreclosed properties that are adding fuel to the fire.
Emergence of fresh and stricter mortgage lending rules that is putting off borrowers and lenders alike.
However, both the presidential candidates stand poles apart in their view of the housing crisis. Here is what each one of them has to say about these issues.
Opinions of Barack H. Obama and Mitt Romney
In its response to the problem of underwater mortgages, the Obama administration came up with HARP (Home Affordable Refinance Program). Under this program, borrowers with loans backed by the Fannie Mae and Freddie Mac will be able to refinance them at affordable rates with a flexible repayment plan.
However, in the view of Mitt Romney, the HARP could have been better that would have helped those struggling mortgage borrowers to retain their homes. Moreover, he questioned about the ultimate beneficiary of the refinance program and the person who will be held liable for making the monthly payments.
In another instance, Romney has spoken of doing away with the tax breaks offered to high-income individuals for buying second homes. Moreover, he has vowed to remove tax deductions on income and properties as well. However, he hopes to keep the amount of the revenue unhindered while keeping the rates low.
On the other hand, Obama has plans to limit the mortgage tax deductions for home-owners with an annual income of more than $250,000.
Therefore, if President Barack Obama returns to the White House, then people should expect a slumped economy and an equally struggling housing market well throughout 2013. On the contrary, if the nation chooses Mitt Romney as their new president, then graduates may see a rise in the employment rate and a marginally resurgent housing market.