How Will an Obama Administration Help the Housing Market?

Barack Obama has a lot on his plate, now that he has won the presidential election. Between rising foreclosures and falling home prices, housing issues are probably the number one thing on many American’s minds. Because of the continuing crisis in the housing market, it is likely that President elect Obama will hit the ground running once he takes office, and for many people in the current real estate market, it will be none too soon.

 

 

In fact, a full slate of complex housing market problems need to be addressed, from the restructuring of mortgage giants Fannie Mae and Freddie Mac to the

modernization of the Real Estate Settlement and Procedures Act, which governs home sales.

But foreclosures are likely the No. 1 concern, because that problem is a big one for everybody in or out of the real estate market and housing industry. According to a report from Credit Suisse, 6.5 million loans were expected to fall into foreclosure over the next five years. That’s based on home prices dropping 10% in 2008 and 5% in 2009, before rising 3% in future years. And the problem affects the entire global economy, not just homeowners.

 

President elect Obama made proposals involving the housing crisis, which included among other things a three-month moratorium on foreclosures for banks or lenders getting money from the $700 billion federal rescue plan — if the customer is making a good-faith effort to make payments and renegotiate the mortgage. Obama also called for bankruptcy reform, which could help at least some homeowners ride out the current housing market crisis and make it through the other side. This proposal would allow bankruptcy courts to modify an individual’s mortgage payments; currently, bankruptcy judges are prevented from making these alterations. But there are many people who think this is just a crisis to those who own real estate, therefore, it is facing opposition.

 

Analysts from the National Association of Realtors also expect an Obama administration to focus on regulatory reform of the country’s financial-services industry. There will likely be examination of what went wrong, and changes so there is proper regulation of mortgage- and other asset-backed securities, according to an NAR report. As to how many of these proposals we will see enacted once President elect Obama takes office, well that remains to be seen.

 

As we all know, the President doesn’t work in a vacuum and there has to be cooperation on both sides of the isle to make much of this work. That being said, I think there are many signs that the future will start looking brighter for the housing market and real estate industry. However, change takes time, so don’t expect anything to take shape the minute after Obama takes office.