Real Recovery Starts with
Investor Lending Changes
by Tom Wilson
and sustainable home
sales environment and
continuum.
And as if this situa-
tion were not enough,
to further amplify the
problem, only 33% of
sellers and those losing
their homes are willing
or able to repurchase.
That’s right, 67% of
former
homeown-
ers have moved from
T
tors need to move forward? I believe the
following three-year changes in loan poli-
cies:
•Increase the amount of available loans to
qualified investors to an unlimited number
for three years (as it was in the past)
•Make the 203K loan program more avail-
able to investors (loans that include funds
for improvements)
•Allow “simple assumptions” of any Fan-
nie, Freddie, or FHA loans
•Allow equal access to all government-
owned inventory for investor and owner-
his is the best window
of opportunity of our
lifetime to procure
real estate for long-term hold.
Unfortunately, the pendulum
at capital hill and Wall Street
overreacted to the short-term
speculative investors at the
height of the bubble and has
Tom Wilson
swung too far back to conser-
vative terms for investor loans,
thus impeding the ability of investors to get buying to
homes off the market and occupied.
renting.We
This is not just a problem for investors have
an
who want to further build their retirement escalating
portfolios and reduce their personal depen- p r o b l e m
dence on the country’s overburdened social of unsold
programs. It is also a serious detriment to homes sit-
this country’s economic need to acceler- ting on the
ate the process of rectifying our debt crisis market. If
from underwater real estate.
owner oc-
Currently 25% of the nation’s and 35% c u p a n t s
of California’s home loans are upside down cannot ab-
From left to right: Sean O’Toole, Tom Wilson, Dr. Doug Duncan, Bruce Norris,
in spite of over three years of a high rate of sorb two- Howard Blum at Fannie Mae meeting in Washington DC May 25, 2011
foreclosure sales. And yet the rate of fore- thirds of
closure sales is less that a quarter of the rate the hous-
that they should be relative to the rate of ing inventory, who will? Clearly the only occupants alike
delinquencies. This has resulted in a “shad- ones who can do that are investors. Not only •Accept more reasonable cash reserves re-
ow housing inventory” of 42 months at the do they absorb foreclosure inventory and quirements
current absorption rates. So far. As a nation provide housing, but by using their capital
What do lenders have to lose by these
it appears that if something doesn’t change for improvements they also remove blight changes? Very little. The long term inves-
it will take 4-7 years to get to a more normal from neighborhoods, thereby improving tor delinquency rate is no higher than that
property
values of owner occupants and it is actually lower
and local tax rev- for FHA loans. Current and traditional in-
enue. If more in- vestors are not speculators; they add value
vestor financing and experience to the process of turning
is made available, empty homes into family homes. Finally,
the absorption rate many of the changes that investors seek are
will accelerate and roll-backs to the policies in place before
with it the end of loosening of lending policies fueled pur-
our real estate cri- chases by under-qualified buyers. Investors
sis becomes more don’t just want, they know these changes
tangible. Histori- are essential to the recovery of the real es-
cally, the real es- tate market in the U.S.
tate economy has
To promote these ideas with the policy
always played a makers at Fannie Mae and HUD, I re-
leading roll in our cently joined Howard Blum, President of
national recovery The Financial News and Information Ser-
Source: Corelogic, ForeclosureRadar.com
from recessions.
vice, Bruce Norris, President of The Norris
What do inves- Group, and Sean O’Toole, CEO of Fore-
Realty411Guide.com
PAGE 58 • 2011
reWEALTHmag.com