After raising the question of how the election might impact the housing market’s shadow inventory, it was obvious to see we had touched on a key issue near and dear to many voters’ hearts, minds, and wallets. Responses to the initial installment of our special election series poured in, and while we can only share some of the reactions here, we’d like to thank all of you who took the time to put your perspectives into words and join in the conversation.
One REO broker from Indiana issued a markedly pro-Romney proclamation, stating, “I feel strongly that Mitt Romney is the best choice by far. His leadership will inspire greater confidence on the part of both buyers and sellers, lenders, and other professionals in the industry.”
This particular broker went on to address the question of shadow inventory specifically. “I feel that if a new administration is elected, the shadow inventory will hit the markets because we will see the banks feel some relief from the pressure [caused by] this administration.”
Barbara Mancovsky, division manager for Nationwide REO Brokers, Inc. in Massachusetts, said, “I couldn’t disagree more with the premise that the inventory has somehow been affected by the presidential campaign.”
Mancovsky explained, “The reality is that banks and servicers have been dealing with a lot of change since the crisis began, including the AG settlement which left the field open for future lawsuits. In addition to the changes, default professionals are trying to catch up on the backlog since the pipeline locked in August of 2010. Add to that the challenges associated with new regulations, which seem to come out faster than adjustments can be made and the never-ending list of potential risks associated with foreclosure, and it starts to get slightly more complicated. It’s getting harder and harder to move anything to REO, especially if you are one of the bigger banks.”
She added, “If we see inventory post election, it’s just reflective of the timeline it took to get there and not based on the fact that an election happened to be scheduled at the same time.”
Beth Acton, a licensed Realtor for ERA Colonial Real Estate in Texas, also chimed in, saying, “My hope is that Mitt Romney will be elected and he will loosen the constraints the government has put on the banks and lenders which will allow them to release their backlog of inventory.”
Acton further described what she’s seen result from the previous election. “I have been in the REO business for the last five years and I have seen a steady decline in inventory since Obama was elected,” she said.
Tackling the issue of employment was Rob, a mortgage lender from Northern California. Rob made the distinction between the two candidates, saying, “Romney’s focus is on supporting growth in the private sector, while the president’s focus for new jobs is in the public sector.”
Rob further explained, “Although a Romney presidency will probably result in a short-term pause in our recovery and possibly quicker turn to inflationary measures, that is what we need to see the recovery take a long-term foothold and turn us onto the path of true prosperity once again.”
Tony Youngs, a full-time real estate investor in the Atlanta area, thinks the shadow inventory is probably bigger than we realize. “I feel the market is appearing to get better because the administration does not want anyone to know about the shadow inventory,” he said. “[T]here are millions of people behind on their payments and some have not made a payment in over two years but foreclosure has not been started yet. The back payments to bring these loans current are so high it would be impossible to catch up. ... The current president had come up with all sorts of plans and programs to help, but lenders would not cooperate so all these plans failed.”
Ron Sullivan, an REO agent with Sully and Associates Realty, Inc., in Bakersfield, California, addressed the market’s foreclosure crisis, first and foremost. “I have done REO for the past six years and seen the inventory drop drastically year-to-year, but yet on every street there is a vacant home, or three or four, underwater mortgages. I can’t help to think that the Obama administration has been a big influence on the [slowing of the] foreclosure process.”
Toni Moss, founder and CEO of EuroCatalyst BV, called attention to what she sees as the real issue at hand. “Comparisons between conservative and liberal parties’ future plans to remediate the housing market are impossible because one candidate is unwilling or unable to offer any specifics on his economic plan overall, including plans for the housing market,” Moss said.
“Romney has basically said, ‘Let’s have a fight—and if I’m not there in 5 minutes, go ahead and start without me!’ What Romney has discussed about the housing market is very broad and simplistic, with potential remedies that everyone already agrees on, i.e., let’s streamline foreclosures and restructure the GSEs. As we say in Texas, it’s all hat, and no cattle,” according to Moss. “Therefore, there is really nothing to compare or contrast between potential administrations, just a lot of political rhetoric and aspirational hypothesizing.
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