Visionary Home Builders of California

On November 4, 2008 history was made… on that day the Nation and World witnessed the election of Senator Barack Obama, the first African American minority to ever become President of the United States. Even more surprising than the fact that he was elected was the manner in which he was elected, with 379 Electoral College votes, his victory was a landslide. But this election is also significant because for the first time since the Carter Administration the Democrats control both houses and the Presidency. While it may seem that President Elect Obama is going to have an easy time ahead of him by having his party control both houses the fact is that he has a big task ahead of him in terms of the economy and the housing crisis. Most pertinent to us in the industry, home buyers, home owners, and those at risk of losing their homes is what exactly President Elect Obama has in mind with regards to housing and related issues. Keep the in mind, the information I am presenting is credible yet at the same time speculative, most of the information comes primarily from Obama’s website, speeches and comments he has made while campaigning. I am sure that we will receive much more concrete information once President Elect Obama has assembled his transition team, Cabinet and has stepped into the White House.

With regard to the financial markets President Elect Obama’s plan, for the most part, is set on undoing the deregulation that has occurred in the past years, deregulation that arguably led to the current housing and financial crisis. For example, Obama plans on streamlining the current regulatory system from a system of competing regulatory agencies to a single one. In addition he plans on creating a financial market oversight committee which would report regularly to the President, his advisors, and Congress on important issues before they become a crisis. He also plans on providing the Federal Reserve with basic oversight authority over financial institutions in order to ensure that the Fed becomes a lender of last resort.

Related to consumers, homeowners, home buyers, and those losing their homes Obama plans on providing more funds to prevent foreclosure, and rehabilitate the housing market. Part of Obama’s agenda includes establishing an FHA Housing Security Program similar to the one proposed by Chris Dodd (D-CT). This plan would incentivize lenders to buy or refinance mortgages and convert them to conventional 30 year fixed mortgages. The incentive to lenders would be that the Federal Government would guarantee these loans. In addition, Obama has proposed enacting an additional $30 billion dollar stimulus package which would establish a $10 billion dollar foreclosure prevention fund aimed only at homeowners not speculators and would emphasize foreclosure counseling resources. The other $20 billion would go to local communities facing revenue short falls due to foreclosure and to fund extensions on unemployment benefits. Finally, his plan would include $10 billion dollars toward Mortgage Revenue Bonds, which will be used to refinance sub prime loans and to assist first time homebuyers.

In addressing the lending industry, Obama’s plan is set on regulating lenders while punishing the unscrupulous ones, and protecting consumers. Obama attacks the root of the problem by proposing to ensure accountability in the sub prime mortgage industry. He intends on enacting what is known as the “STOP FRAUD ACT” which provides a federal definition of mortgage fraud, increases funding for law enforcement and prosecution and creates new criminal penalties for mortgage fraud. Obama also calls for more accurate and simplified loan disclosures which would protect consumers by providing a standardized borrower metric known as a HOME score which would allow borrowers to compare and understand mortgage products. Furthermore he would close bankruptcy loopholes for mortgage companies which would eliminate provisions that prevent bankruptcy courts from modifying mortgage payments. Under current rules bankruptcy courts cannot modify the terms of a mortgage even if the loan was predatory.

In all, Obama’s message of hope seemed to inspire voters around the Nation to believe in him. Obama’s plan to regulate and stabilize the financial and housing market also seems to offer a glimpse of hope that as a Nation we can overcome the current crisis. While the plan seems overly ambitious it seems to contain the necessary tools and elements to remedy the current problem and prevent a future one from occurring.