Ownership / Forclosure
As a banker and mortgage banker, I know all too well that most Georgia families’ primary asset and wealth is tied up in their home. Home ownership remains critical to fulfilling the American dream. The current mortgage crisis and its broader implications for the financial markets cannot be fixed until we first stabilize real estate markets and prices. I support Senator Johnny Isakson’s bill which extended a $15,000 tax credit to ALL HOME BUYERS in the 2010 budget and calendar year.
Working with lenders large and small, the federal government should inventory and assist in marketing foreclosed properties and toxic real estate assets to move them back into private hands and off the taxpayers back. This is how the Reagan administration dealt with the collapse of the savings and loan industry in the early and middle 1980s. As a banker, I also know we have to get the credit markets working again, banks cannot make money solely on credit card portfolios and the spread between prime interest rates and what they pay pass book savings and checking accounts. Lending money and extending credit is the way banks make money. Georgia has been labeled the epicenter of banking industry collapses in part because many of our smaller and newer banks were overly dependent on real estate and commercial development in their loan portfolios. Though a high rise or new hotel might be exciting, typically small businesses and homeowners are a safer bet. Unfortunately the Clinton Administration made Fannie Mae and Freddie Mac into America’s home lender, removing that safe and stable lending portfolio from the reach of many smaller and newer community banks.
The longer the flood of foreclosed properties continue unabated into the marketplace, the longer overall real estate housing prices will remain flat or depressed. As with the Resolution Trust Corporation liquidation of S&L assets in the late 80s, the FDIC, Fannie Mae, Freddie Mac and HUD should schedule a massive sale and auction of these assets later this year or in early 2010, also making these purchases eligible for the aforementioned tax credit. Until these ‘toxic assets’ are off the books, and again appreciating in value the traditional home-buying market and standard increases in property values will remain influx. The almost complete shut-down of the home-building industry will also allow for demand to ‘catch up’ with supplies of new and existing housing, which will also have an upward impact on home values and pricing. This real estate pricing recovery have the additional benefit of increased resale prices, improved property tax values and revenues to local governments and overall increased economic wealth and savings among American families.
