Daily Archives: October 14, 2012

Why You Need to Get 3 Bids for Your Construction Project | Bedford NY Realtor Robert Paul

Getting prices from contractors for your construction project probably scares the daylights out of you and for good reason: You don’t really know what you should be paying for the work.

How do you know whether the price you’re offered for your new home or remodeling project is a “good” price?

How do you know whether you’re paying too much?

There are no window stickers to compare

Hiring a contractor isn’t at all like buying a car.

By the time you get to the car dealer, you’ve already checked KBB.com, Autotrader.com, Edmunds.com and maybe a few other websites. You’ve checked newspaper car ads and talked with someone you know who bought the same car you’re considering.

You know exactly what you should pay for the car because there are hundreds — maybe thousands — of cars for sale just like the one you want; the price is pretty much set.

What’s the “set” price for your one-of-a-kind custom home or remodeling project?

How custom projects are priced

When a general contractor picks up a set of plans from the architect, he starts by making a series of take-offs — estimates of the amount of a particular finish or material based on the plans.

The contractor might estimate he’ll need 80 square feet of granite countertop in the kitchen, for example, and at $50 per square foot, that’s a line item in his bid of $4,000.

He’ll also send copies of the plans to his suppliers and subcontractors for prices on the work he’ll hire them to do. The window supplier will price each unit and send a total to the contractor, and the contractor will be responsible for figuring the price to install the windows.

The contractor will add line items for permits, insurance, temporary utility services and dozens of other things. Finally, he’ll total them all up and add his overhead and profit.

It’s a time-consuming and nerve-wracking process for the general contractor because he’s got to get it right — too high and he won’t get the job. Too low and he’ll lose money on the project.

Different contractors, different prices

Surprisingly, different contractors bidding from the same set of drawings can come up with substantially different prices, especially when the drawings aren’t as detailed as they should be. That’s too often a culprit.

But just as important, and frequently overlooked, is your choice of contractors to bid on the project.

Choose three qualified contractors, and you’ll get comparable bids. Choose poorly, and — well, read on …

Apples and oranges

We recently completed the construction drawings for a medium-sized but fairly complex remodeling and addition project with a construction budget of about $240,000.

I recommended two qualified contractors to the owner — contractors I’d worked with before and knew well. The homeowner added the third bidder, someone their neighbor had used for work on their house.

I’d also worked with that third bidder and knew he did top-quality work — but for significantly higher prices than other contractors in the area.  I also knew that he rarely bid on work; he preferred designing his own projects.

I didn’t think he was a good fit for our project, but the owner insisted, and we kept him on the list. Here’s how the three prices came out on the $240,000 project:

  • Bidder 1: $236,000
  • Bidder 2: $243,000
  • Bidder 3: $363,000

Clearly, something’s wrong with that last bid at 50 percent higher than bid  No. 2 — a math error perhaps?

No, the contractor told me; that was his price. More importantly, it was the price he would expect to get on a similar project.

Imagine if the owner had chosen to not bid the project and had only taken a price from bidder No. 3 — he would never have known that he was paying $120,000 more than he had to!

This is not the contractor you’re looking for

Bidder  No. 3 boasts a wall of awards, does great quality work and has a long list of satisfied clients.  And if you’re willing to spend a lot more to assure quality, it might be the right choice for you.

But with the help of your architect, you should be able to get the same quality work for a far more reasonable price. And with properly-detailed drawings, a good list of specifications and three qualified, comparable contractors, your bids should come in reasonably close to each other.

Two bidders aren’t enough to give you confidence in the bids; four or five are too many to manage — and you’ll greatly decrease a contractor’s motivation to bid if he has only a 20 or 25 percent chance of getting the job.

The key is three: Always, always get three qualified bids on any significant custom home or remodeling project.

And maybe you’ll save enough on the project to go out and buy that new car you’ve been dreaming of.

Knicks Star Carmelo Anthony & Wife La La Looking for New Digs | Pound Ridge NY Realtor News

Carmelo Anthony will soon be on the move.

No, not from the New York Knicks, whom he joined last year and signed a three-year, $67 million contact extension to become the face of the Big Apple’s NBA franchise. Instead, Melo and his reality TV star wife, La La, are out looking for a new Manhattan apartment to rent, now that their current pad at The Hit Factory has hit the market.

Carmelo Anthony and his wife, La La Anthony. Source: Zimbio

Melo rented the 3,800-square foot penthouse duplex at 421-429 W 54th St, New York, NY 10019 after his trade to New York from the Denver Nuggets last February, but there will be no lease extension now that the 4-bedroom, 3.5-bathroom condo is listed for sale for $5.75 million.

According to the New York Post, La La Anthony was spotted in the Upper East Side looking for the couple’s next NYC abode, which has to include room for their young son.

The Hit Factory is a 25-unit condo building in Columbus Circle that once housed one of the most famous recording studios in the world — a place where everyone from the Rolling Stones to Bruce Springsteen to John Lennon to Mariah Carey cranked out some of the greatest and best-selling music recordings in history.

But for Anthony, who actively sought to move his career to New York after refusing a contract extension with the Nuggets, it’s not music history he cares about. He wants to return the wayward Knicks to NBA playoff prominence, and with a contract that runs through the end of the 2014-2015 season, the All-Star knows his time in New York could be short and intense, if he doesn’t deliver.

Maybe that’s why Melo and his savvy wife, who stars on the VH1 hit “La La’s Full Court Life,” are not rushing to buy any pricy NYC real estate, but instead will continue to be renters.

How to Buy or Sell a Home That’s off the Market | Bedford Corners NY Realtor Robert Paul

It happens all the time. Sue hears that a friend of a friend, Bob, is looking to buy a place. Turns out, Sue is looking to sell her home. Or a guest in someone’s one-of-a-kind home tells the owners they’d love to buy the property, should the homeowners ever decide to sell.

And so begins the discussion between the would-be buyer and seller of a home that’s not even on the real estate market. How do they do the transaction? What steps are involved? What are the risks?

There are pros and cons for both parties and major considerations before either signs on the bottom line. But too often, these sellers and buyers get ahead of themselves and don’t think through the logistics and details. Here are seven questions to ask yourself about selling or buying a home that’s off the market.

Are both parties serious?

Buyers and sellers like the idea of making a deal off the market. But when it comes down to it, are both parties really on the same page? Has the buyer been in the market for a while? Are they truly ready to buy? Is the seller really ready to sell? Are their numbers in the same range, or is one way off?

Often, an unrealistic seller will throw out a number that’s way higher than what the market supports. They do this because they’re either uninformed or they feel they should get more because they’re risking selling off the market. On the opposite side, an uneducated buyer will throw out a lowball offer if they haven’t been in the game long enough to know the value.

How to decide on price?

Both parties have a serious commitment and are ready to do a deal. Great; now they need to agree on how to make it work.

Among other things, a price needs to be established. If they’re in the same price range but can’t agree on a number, there are a few options. One would be to have two independent appraisers come out and do formal appraisals of the property. The buyer and the seller can average the two. However, many argue that the appraised value (the number the appraiser comes up with) is always lower than the market value (the amount an able and willing buyer/seller would pay on the open market). In this case, a real estate agent may be called in; more on that in a minute.

Are there savings on the real estate commission?

Many sellers see the opportunity to sell off the market as a chance to save the agent’s standard 6 percent commission. But this can be short-sighted. First, both parties often bring a real estate agent into the transaction at some point. Second, the buyer might want the 6 percent commission deducted from the purchase price, but the seller doesn’t see it that way. For example, the seller might want $500,000. The buyer offers $470,000 ($500,000 minus the 6 percent commission). If they split the difference and the home sells for $485,000, they both win.

What ultimately happens is that the market decides the purchase price. If inventory is low and the buyer wants to make the deal work, they may pass the savings on to the seller. Or if it’s a slow market and there’s too much inventory, the seller may pass on the savings to the buyer. Many times, however, the seller and buyer agree on a number in the middle of the 6 percent, so each party benefits.

What are the risks?

The buyer and seller will likely have that little voice inside saying, “What would this sell for if it were on the market?” Buyers may wonder if they’re paying too much, while sellers might worry they could get more money on the open market. This is the risk both parties take in an off-market deal. Both the buyer and seller need to feel comfortable before they sign the contract. This is why a real estate agent is often consulted.

What is the role of the real estate agent?

With so much at stake financially and emotionally, most buyers and sellers ultimately don’t want to go it totally alone. The fear or uncertainty will outweigh any potential savings. An active buyer may have been working closely with an agent for months. A serious seller could be on the verge of signing a listing agreement. One or both may want the feedback or advice of their agents on price.

Some real estate agents will provide an opinion of value for a nominal fee or for free. Another good option is to ask the agent, in addition to providing the opinion of value, to take on the back-end parts of the deal at a discounted rate. In this case the agent might be responsible for inspections, disclosure review, title search and the contract, but not any marketing, open houses or showings. How this is negotiated is up to both parties. And be aware that some agents won’t feel it’s appropriate to reduce their fee at all.

Should you hire an attorney or escrow company?

There are some situations in which the buyer has a specific home they want to buy and a fair price is obvious to both parties. Maybe there is a one-of-a-kind home they’ve been eyeing in their neighborhood for years, and they know the value because they live nearby. Or the buyer may find a home on Zillow with a “Make Me Move” price in line with their budget. If the prices are right for both parties, and there aren’t any complications in the disclosures or inspections, they may hire an attorney or an escrow company to facilitate the deal for a flat or hourly rate.

How to cover all the bases?

If you decide not to go the formal listing and sales route, be sure to cover your bases and protect yourself legally and financially. Always go with your gut. If something doesn’t seem right or you’re uncertain, bring in the professionals. Going it alone may have its upsides, but the downsides could outweigh them in a heartbeat. Don’t be afraid to ask your real estate agent for advice. A good agent will recognize that, while a full commission would be great, two potential future referrals may be worth the time and effort.

A Blog is Really Like a Movie… | Armonk NY Realtor

What is a blog really like?” was the question asked.

And the answer that satisfied the audience was “A blog is really like a Movie…”

I was addressing a group of non-bloggers and I found it hard to explain what blogging really is. Suprisingly, the answer which satisfied them was one in which I explained how a blog is really like a movie… The reality is that there are several people in the world who don’t know what a blog is and why anyone in the world would spend their time and money in blogging.

And to such an audience, the most effective and satisfactory response was this “Every blog that you publish is really like a Movie…”.. ..And in this blog post, I’ve tried to make my point on the co-relation between the Movie World and the Blogging World….

I am neither a Movie buff nor do I understand the nitty gritties of movie-making.. But I do have a high level understanding of movie making and of course, an in-depth understanding of creating a successful blog…

There are really 3 broad phases in making a movie / blog

Phase 1 – The Ideation Phase : In which you have an idea for your movie / blog
Phase 2 – The Creation Phase : In which you give form to your idea to create the end product (movie / blog)
Phase 3 – The Promotion Phase : In which you market your creation (movie / blog) to an audience
And then of course, is the Feedback phase in which the audience verdict is OUT – Good, Bad or Ugly!

Phase 1 – The Ideation Phase
This is probably the most critical phase in the journey of making a movie or a blog. Simply because you need to have an idea for your blog – In terms of the topics of focus for your blog and specifically in terms of the topic for every single blog post of yours! And if you get this RIGHT, your chances of success increase manifold!

Phase 2 – The Creation Phase
For easy of communication and comprehension, refer the comparison below:

In the Movie World In the Blogging WorldDirector Blogger – In terms of making the idea come to life and ensuring that everything needed from the creative or technical side is taken care of Producer Blogger – In terms of the investments he / she does to create and maintain the blog (both the design elements and the content) Story This really translates to how the blogger is able to articulate his / her idea into words and the power of the message in the blog! Actors (Hero / Heroine) The words. Yes! The words you write on your blog are your final actors. You can make them perform the way you want based on your choice of words, your literary elegance and your presentation style Editor Again, the blogger itself if he /she does the editorial work or someone else you hire for your editorial efforts Special Effects This can be through pictures, music, podcasts, video blogs, infographics, etc. – You can choose your special effects based on your individual creativity, preference and context.The point to note is that there are several options available and you can decide based on the kind of investments you are willing to make (time and money), your target audience, your objective for the blog and the impact you want to create! Guest Performances Don’t we all like the appearance of a guest actor / star in a movie? Be it for a special song or just to make a point! Sure we do because it’s just so refreshing. So it is with guest blogs.As a blogger, you allow other guest bloggers to write for your blog to bring in diverse points-of-view to your audience. Also, not to mention the actual effort of creating the content (which becomes a challenge after a while) is the responsibility of the guest bloggerAlso, as a blogger you probably also write guest posts for other blogs because your able to enhance your brand and reach a wider audience with minimum time and efforts (as someone else is finally responsible and accountable) for the end product

Phase 3 – The Promotion Phase
This is probably the most important phase as it determines the results that your efforts yield. Firstly, you need to be clear about who your target audience is. And then you need to define and execute a well-integrated marketing plan to promote your blogs. So for e.g: You need to send an e-mail about your blog or share it on FaceBook or ask some celebrity (online / offline) to share your blogs on Twitter, etc etc. While there are many channels, what’s impoartant is to decide on the key (say 3) channels you will leverage for your promotional activities…

Three Amazing Ways Social Media is Changing the World | South Salem NY Real Estate

The more I am immersed in the culture of the social web, the more I am certain that it will not only change the world forever, it will change it for the better. Specifically, there are three areas that energize and inspire me!

The democratization of opportunity

A few months ago I had the most uplifting talk with Xavier Damman, the mastermind behind Storify. As a teenager he started working on his idea for a new business by coding in his small apartment in Belgium. He didn’t have a formal education in building a business — in fact, he didn’t have any business experience at all! So he just got to work, teaching himself how to code through free resources on the web and “googling” himself through any roadblocks he faced.

After months of faith and hard work, he had built a meaningful business, attracted Silicon Valley funding and was making his vision come true at the age of 22.

To me, this is so wonderful and amazing! When I was young, to start a business, you had to actually make something. You needed assets, funding and some way to tap into the traditional business infrastucture. Those business barriers have been destroyed, unleashing an unbelievable amount of inspiration and creativity.

coder dojo

We’re in the first generation where our children are the experts. I recently visited a new free, global movement called Coder Dojo (post forthcoming!) that is teaching elementary school children how to create software and apps. This energy, this opportunity, can change the world. The future is something to be achieved, not just an inevitable result of your family’s economic conditions or the university you attended.

Economic power is shifting from those who control to those who share.

Social media as a global unifier

There are now close to 1 billion people registered on Facebook and half of them use it everyday. Research from The Social Habit shows in the sample surveyed, 80% of Americans between 12 and 24 have a Facebook account. Can you name any product in history that has that kind of market penetration?

global digitalSo the world is slowly being unified in one small way through these social platforms. No matter our religion, economic status, political beliefs, or the color of our skin, the Net Generation loves to share favorite apps, complain when Twitter is down, and debate the latest Facebook innovation.

Of course there are still pockets that are left behind. Some people may simply be slower adopters of technology. Some regions of the world may not yet have access to the Internet or oppressive governments limit their citizens ability to connect. But this is changing. The debate is now turning toward the consideration of access to the Internet as a basic human right. Think about the power of that! Could there be a day in our future where nearly every person on earth is united by this pulsing, creative, liberating beam of electrons?

Yes, the social web is filled with spammers and cat jokes but let’s not take for granted how far we have come in connecting global voices in such a short period of time!

The hive of solutions

The social web gives me hope for true, meaningful progress on difficult global issues and re-building a better world.

One only needs to look at the mess that is Washington DC to realize that millions of people are needlessly suffering because of political rancor. In general, our universities reward professors for consistency and longevity instead of flexibility and innovation. Many of our largest and most important companies are straining to remain relevant in a digital world through leaders who cannot open a Twitter account. None of these traditional sources of problem-solving and power can keep up with and respond to the pace of the world today.

network of ideasThankfully, there is another option — our collective, networked intelligence. Perhaps our most glorious hope is that the social web can self-organize to solve problems. The web is clumping into hives of experts who are organized by the problems themselves instead of company silos, national boundaries, or political appointment.

Innovation, education, solutions for urban decay, international diplomacy, health issues, cracking highly complex technical problems — almost every significant human problem is being debated and, and I believe, will eventually be solved by passionate experts wherever they live.

Civilization is being rebuilt through networked intelligence. We are being mobilized and we are all on the same side — a better world.

Waccabuc NY Real Estate | Romney’s plan in 3D

The wind blows the tightly regulated part in his hair. The stage seems makeshift, but the scene in front of a foreclosed home in Florida is well choreographed.

In January, the Mitt Romney campaign chose this quiet neighborhood in Lehigh Acres, Fla., just to the east of Cape Coral and Fort Myers, to give some of the first insight into how the eventual Republican nominee would combat a foreclosure crisis still raging five years after the housing meltdown.

“You’re wondering what’s going on behind me over here,” Romney says, displaying a mechanical awkwardness that has haunted his attempts off the script before and since. “This home is in foreclosure. They bought a home, got an adjustable-rate mortgage, and their payments went up and up and up, and they met with their mortgage banker who told them to stop making payments on the old mortgage so we can get you a new one. You know that story. So they got a foreclosure notice.”

There are some boos. The family he’s talking about stands off to the side behind the stage in the yard.

“But they worked that all out,” Romney goes on. “Believe it or not, with lawyers and all that, they got a new mortgage and began paying every month. Made the payment for six months, but they got another foreclosure notice. And they called the bank and said, ‘We made our payments every month. You’ve been cashing our check.’ And the bank said, ‘Oh we’ve been applying those payments to your old mortgage.’”

It’s a familiar story in Florida, which took center stage to the robo-signing saga. Mortgage servicers had to settle with the Obama administration and 49 state attorneys general for $25 billion in fines and relief to homeowners for fast-forwarding the foreclosure process at the expense of an untold amount of homeowners.

The scandal sparked some of the worst vitriol toward the industry since bankers rode out of Washington with more than $700 billion in bailouts during the financial crisis. But what Romney says next hints at how he views the unfortunate mechanics of an industry that never adjusted until it was too late. The media would slap the quote across front pages in the morning.

“The banks aren’t bad people,” Romney says. “They’re just overwhelmed right now.”

Throughout his campaign, commentators made much about Romney’s lack of specifics toward his plan to rebuild housing. Indeed, there isn’t much in the way of details. But along the campaign trail, bits and pieces can be found. In this one, in front of a foreclosed home in Florida, he continues a mantra that the real estate market “should be allowed to hit bottom,” and the failed programs from the Obama administration should be shelved.

In a more detailed plan released at the beginning of September, Romney attempted to pin the foreclosure crisis on Obama himself. The document asserted “under President Obama … homeowners have received more than 8.5 million foreclosure notices.”

However, such foreclosure actions were not taken as a result of Obama administration policies. Rather, they occurred because the housing market crumbled and credit markets shut down beginning in 2007, well before Obama took office.

According to most estimates, the number of homes actually lost to foreclosure is 3.7 million to 4 million.

The rest were either modified, disposed of through short sales or tied up in a backlogged system caused by the mortgage servicers themselves and the swarm of government programs Romney criticizes in his plan: “President Obama rolled out an alphabet soup of more than 10 housing finance programs rather than offering a real solution.”

So that would be that for the Home Affordable Modification Program, one of the most maligned and underwhelming programs, funded in part via the government’s bank bailout known as the Troubled Asset Relief Program. HAMP and its reams of new guidelines, as Romney sees it, is just as overwhelming as the mounting piles of troubled mortgages facing the servicers still.

The program expires at the end of next year, but House Republicans already cleared a bill to end HAMP. If Republicans gain a Senate majority in November, and Romney wins, they could succeed in their efforts to kill HAMP before it expires.

Romney has given hints along the campaign trail that not every housing recovery program under the Obama administration was a bad idea. He gave a glimpse to the Las Vegas Review Journal in July, seven months after the Lehigh Acres speech. He sat down with the paper’s editors in a state that held the highest foreclosure rate in the country nearly every month since 2007 and one with the highest percentage of underwater borrowers. Three out of every five homeowners in the area owe more on their mortgage than their house is worth. If he wants to win the state in November, he needs to be precise.

Here, he throws his support behind the Home Affordable Refinance Program, known as HARP. Through it, mortgage servicers refinanced more than 1.5 million Fannie Mae and Freddie Mac loans as of July31. In the first seven months of 2012, servicers completed 519,000 HARP refis, more than 400,000 in all of last year, after the program was expanded.

“I think the idea of helping people refinance homes to stay in them is one that’s worth further consideration, but I’m not signing on until I find out who’s going to pay and who’s going to get bailed out, and that’s not something which we know all the answers to yet,” Romney told the paper.

In fact, he appears to like a few more ideas from the administration as well. The Romney plan includes room to “facilitate foreclosure alternatives for those who cannot afford to pay their mortgage.”

This may allude to more short sales or deeds-in-lieu. There’s already a government program built to do just that, but it might be one of the ones Romney vows to throw out. The Home Affordable Foreclosure Alternatives Program, known as HAFA, launched in April 2010. More than 55,000 short sales have been completed through June.

Romney also wants to “responsibly sell the 200,000 vacant foreclosed homes owned by the government.”

But Fannie Mae, Freddie Mac and the Department of Housing and Urban Development reduced their inventory of REO by 18% over the last year to just more than 202,000 properties. At its height of REO inventory in 2010, Fannie held nearly 162,500 previously foreclosed homes. Fannie Mae trimmed that down to a little more than 109,000 properties as of June 30 and is getting more for them as a percentage of the unpaid principal balance than at any point since the recession struck.

The Obama administration also pushed the Federal Housing Finance Agency to develop programs to handle the shadow inventory of foreclosed homes. It launched pilots to rent out properties owned by the government-sponsored enterprises or sell them to investors who would then rent them out.

“Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up,” Romney said.

Mending a broken foreclosure process is already under way, too. Wells Fargo, for instance, said in August that it would have all consent orders and settlement standards — all 300 of them — implemented by October. Short sales are now more common nationally than REO sales, and those foreclosed homes that are being sold are being unloaded for more money than at any point since 2010, according to RealtyTrac.

THE GSE PROBLEM

There are other more complex and politically unsavory problems waiting for whoever takes the reins of the economy in January. The answers to how Romney might approach those, actually came because of an unlikely source: Newt Gingrich.

The Florida campaign lunges toward another debate on Jan. 26. Newt Gingrich, arguably Romney’s most troublesome opponent, stares at his podium. Just before the debate, his ties to Freddie Mac were uncovered. He worked as a consultant to the GSE during the bubble and, according to critics, lobbied members of Congress not to crack down on the mortgage giants even as the housing market was overheating around them.

Romney turns on Gingrich at the debate, and in doing so, reveals what he would do with Fannie Mae and Freddie Mac.

“I think Fannie Mae and Freddie Mac were a big part of why we have the housing crisis in the nation that we have. We’ve had this discussion before. Gingrich was hired to promote them, to influence people in Washington, to encourage them not to dismantle these two entities. I think that was an enormous mistake. I think instead we should have had a whistleblower and not a horn-tooter,” Romney says, almost as frantic as he can get. “He should have stood up and said, “Look these things are a disaster. This is a crisis.’ He should have been anxiously telling people that these entities were causing a housing bubble that caused a collapse that we’ve seen here in Florida and around the country.”

Applause. Gingrich is noticeably uncomfortable. But next, Romney steps a bit too far, and the result might give the industry insight to his preference for the ideal over the reality that Fannie and Freddie have held up the housing market since the crash. For all the disaster they caused, they’re still financing mortgages and by all accounts pretty solid ones. Try getting a GSE loan through today without at least a 720 credit score and a sizable down payment.

“And are they a problem today? Absolutely,” Romney declares. “They’re offering mortgages again to people who can’t possibly repay them. We’re creating another housing bubble that will hurt the American people.”

The Romney campaign did not reply to requests to clarify.

What’s interesting to note, though, was that this part of the debate was kicked off with a question from a voter. The question: “How would you phase out Fannie Mae and Freddie Mac?” Instead of answering, Romney used it to score a blow against Gingrich.

Similar answers come from Romney’s running mate, Rep. Paul Ryan, R-Wis. As head of the House Budget Committee, Ryan released a plan was passed by the House last year to slash spending across nearly every sector of the government, excluding the military.

The long-term outlook of the Ryan plan involves a complete wind-down of the GSEs and an end to the $188 billion in bailouts so far.

The Ryan budget would “privatize the business of government-owned housing giants, Fannie Mae and Freddie Mac, so they no longer expose taxpayers to trillions of dollars’ worth of risk.”

The Romney plan released in September also makes this view clear: “Mitt Romney will reform these government-sponsored companies to protect taxpayers from additional risk in the future by ensuring taxpayer dollars in the housing market are replaced with private dollars.”

The Obama administration’s three options for Congress to consider was released in February 2011 and includes various degrees of government support to the future mortgage market. It allows for a completely private option should lawmakers choose it. But that was where the process stopped with the exception of roughly 15 bills by House GOP members, each largely duplicative of the conservatorship agreements.

“Taxpayers’ exposure to Fannie and Freddie, once an implicit guarantee, has now become an explicit obligation to cover its debts,” Ryan wrote in his budget plan. “The housing finance system of the future will allow private-market secondary lenders to freely and transparently compete, with the knowledge that they will ultimately bear appropriate risk for the loans they guarantee. Their viability and profitability will be determined, not by political favoritism, but by the soundness of their practices and the value of their services.”

Many in the industry feel a completely private system — one that hasn’t existed since Fannie was chartered in 1938 — would be unlikely to ever arrive.

Tom Cronin, managing director for financial adviser The Collingwood Group, said until reforms such as the qualified mortgage, risk retention and the new servicing standards are in place and more importantly understood, private capital would remain slow to return.

“I don’t think anything is in place for that to be a likely outcome anytime soon,” Cronin said in an interview. “Just because he (might be) vice president and just because his budget is being revisited, we’re still nowhere near an era of private capital to support housing finance. Absent some secular activity, there are no broad-based initiatives getting any spotlight.”

The only like-minded bill to move beyond a congressional subcommittee was the Private Mortgage Market Investment Act from Rep. Scott Garrett, R-N.J., which supported a completely private system similar to what Ryan proposed. A subcommittee Garrett chairs approved the bill in December. It has yet to be brought up before a full committee.

Even if Romney wins the election, Republicans would have to take a majority in the House and Senate to pass such a plan, which met opposition from not only Democrats but powerful industry interest groups as well.

Holding back GSE reform is a nonexistent private-label system and yet to be finalized rules under the Dodd-Frank Act. Romney has repeatedly said he would repeal the largest reform of Wall Street since the Great Depression. Even if Republicans take enough power to do this, what Romney has planned may not be so simple as a repeal.

DODD-FRANK DILEMMA

Just days before the Jacksonville, Fla., debate, Romney took the stage again.

NBC News anchor Brian Williams swivels to him as the conversation turns toward the economic problems. “Was it too easy, did vehicles of the government, make it too easy to own a home in this country? Mr. Governor, to help these homeowners or not?”

“You have to get government out of the mess. It created the mess,” Romney answers. “You have to get more people get more flexibility from their banks. Right now with Dodd-Frank we made it harder for banks to renegotiate mortgages.”

Then comes the interesting part, especially from a private-equity guy. He hedges.

“It was poorly regulated. Markets have to have regulation to work. You can’t have everybody open a bank in their garage. You have to have regulation. But it has to be up to date. They didn’t have capital requirements put in place for the different asset classes banks had. They also didn’t have regulation properly put in place for mortgage lenders. Derivatives weren’t being regulated. You have to have regulation. They had old regulation. Burdensome. Then they pass Dodd-Frank, which … it has made it almost impossible for community banks. I was with the head of one of the big banks in New York. He said they have hundreds of lawyers working on Dodd-Frank to implement it. Community banks don’t have hundreds of lawyers. It’s just killing the residential home market, and it has to be replaced.”

Romney later talks about replacements with TIME Magazine. In a sit down for the issue, which published Sept. 3, Romney gets refreshingly specific. One of the most central parts of Dodd-Frank is the risk-retention rule. It requires lenders to maintain at least 5% of the credit risk after selling the loan off to the securitization market and eradicates the lend-to-distribute model. The rule is scheduled to be finalized in January, the same month Romney would take office.

The risk-retention rule may actually survive, though.

“Now, we do need to have regulation in the banking industry. Extensive regulation is appropriate in an industry that has such an impact on the overall economy,” Romney told TIME. “We have to look at what the causes were of the last crisis and take action to prevent those causes from reappearing. What kinds of things come to mind include capital requirements, levels of leverage, which are appropri ate and inappropriate, banks maintaining risk in assets, which they gather. Specifically, I’m referring to the idea (that) if a bank originates a loan or a mortgage that it should be on the hook for some portion of the loss if that loan or mortgage fails.”

The question is, though, how likely is it that Dodd-Frank can be repealed and all those “burdensome” regulations rolled back? He would need 60 votes in the Senate to get it done. According to RealClear Politics, the race for a Senate majority is a dead heat.

With a repeal of the law unlikely, a Romney administration will have to do it the old-fashioned way: gutting regulatory agencies designed to enforce the rules.

Ed Kramer used to be one of those regulatory officials, the New York state banking regulator, actually. But since 2006, he’s been an executive at the compliance firm Wolters Kluwer.

“It’s hard for me to believe it would happen,” Kramer says about a full repeal.

So without it, Kramer believes Romney may take a piecemeal approach. Target No. 1, he said, would be the Consumer Financial Protection Bureau.

“If he becomes president and even though the CFPB budget is a percentage of the Fed, you have the director sitting in there on a recess appointment. One of the first things he’s likely to do would be to put their people as head of the various regulatory agencies,” Kramer says.

To keep from upsetting the market too much, the qualified mortgage rule, the risk-retention rule Romney backs and the loan officer compensation guidelines would likely proceed as planned. The key part, though, will be examinations. A director under a Romney administration will be very different from the aggressive tactics CFPB Director Richard Cordray has already taken under Obama.

One mid-sized mortgage lender in the Midwest spent $1 million preparing and handling a CFPB examination, according to Kramer. This kind of cost will likely be a priority for a Romney appointee, and enforcement will likely take a backseat.

But even more glaring would be changes at the Justice Department. When President Obama tapped Eric Holder as the U.S. attorney general, Holder brought in arguably one of the most feared men in mortgage finance today. Thomas Perez. Perez leads a DOJ team that cracked down on lenders for charging minority borrowers more for mortgages than similarly situated white borrowers during the housing bubble.

Most recently, Wells Fargo had to pay roughly $175 million to homeowners and community groups around the country to settle claims its wholesale lending brokers allegedly charged black and Hispanic borrowers more for the same subprime mortgages whites took out.

There’s concern in Congress the DOJ may be too involved in these cases. The Justice Department and other regulators use disparate impact analysis to pursue Fair Housing Act crackdowns themselves, rather than pursuing a lender’s intent to discriminate.

Rental property owners sued St. Paul, Minn., recently for enforcing housing codes and cracking down on substandard living conditions, which the managers claimed cut down on affordability. Had St. Paul won its case from local the Supreme Court, the ruling would have defanged the government’s major Fair Housing Act claim when pursuing the banks.

A House subcommittee is investigating what Justice said to St. Paul officials before the city withdrew its defense against a housing discrimination case from the Supreme Court.

“We’ve not only seen much more enforcement from DOJ but much more aggressive enforcement in last couple of years,” Kramer says. “There may be other emphasis on what their priorities would be under the Romney administration.”

When asked if the industry should expect such a large diversion from what the Obama administration is doing, Kramer says for all the rhetoric, he hopes some of the new emphasis remains.

“I would like to think that if Mr. Romney becomes elected that he will maintain some level of consumer protection. I don’t think he would take it all out, certainly if wants to be elected for a second term. Would it be as much? Based on what he’s saying it’s likely not,” Kramer says.

Kramer remembers when he was a boy, he shared a room with his siblings. It was crowded and uncomfortable. But when he was 8, his parents had managed to save up a 20% down payment and moved into a large place in Connecticut. It sounds simple the way he puts it. He wonders how it all went wrong, but he doesn’t wonder how it will be going forward under Romney or Obama.

The industry under either one can’t be saved again.

“We can’t do it the way we did it the last time around, when we raised up the levels of affordable housing. Where you originate a junk loan and it goes into a private-label security and you take a bunch of those CDOs and put all these top ratings on them,” Kramer says. “My hope is that we’ve all learned a lesson to not allow that to happen again.”

Obama’s second-term housing design | North Salem Realtor

On the afternoon of Aug. 20, President Barack Obama stepped up to a podium in the White House briefing room for the first time in two months. He had taken criticism from reporters and Republican political operatives for not holding a press conference while his GOP presidential opponent, former Massachusetts Gov. Mitt Romney, took questions from his traveling press corps.

About nine minutes into the 22-minute conference, Obama received this question from Jake Tapper, ABC News senior White House correspondent:

“With the economy and unemployment still the focus of so many Americans, what can they expect in the next couple months out of Washington — if anything — when it comes to any attempt to bring some more economic growth to the country?”

Citing historically low interest rates and a “housing market that is beginning to tick back up, but is still not a all where it needs to be,” Obama, in response, urged Congress to pass a home refinancing plan he proposed eight months earlier.

“There are a lot of Americans still underwater because housing values dropped so precipitously and they’re having trouble refinancing,” Obama told Tapper at the press conference. “We’re going to be pushing Congress to see if they can pass a refinancing bill that puts $3,000 into the pockets of the average family. That’s a big deal. That can be used to strengthen the equity in that person’s home, which would raise home values. Alternatively, that’s $3,000 they can spend on a new computer or clothes for their kid going back to school.”

Two days later the administration dispatched Housing and Urban Development Secretary Shaun Donovan on a multistate trip to promote three Democratic Senate bills the secretary said would complete Obama’s refinancing initiative. (Back in May, Donovan predicted the bills would gain quick bipartisan support.)

Perhaps Tapper should have extended the timeline of his question and asked what homeowners should expect in not just the next two months, but the first year of a possible Obama second term  — considering the chances of his home refinancing initiative gaining passage-worthy bipartisan support in an election year are dubious at best.

HOUSING STRATEGY

Obama campaign spokesman Adam Fetcher tells HousingWire the president has a cogent housing strategy.

“The administration has put forward a plan to help more responsible borrowers refinance their mortgages while taking concrete steps to help families stay in their homes, revitalize the communities hardest-hit by the housing crisis, and reform the mortgage lending market to better protect both consumers and taxpayers,” Fetcher says.

Obama’s amalgamation of housing programs — Home Affordable Modification Program, Home Affordable Refinance Program, second-lien write-downs, forbearance, hardest-hit funds, Federal Housing Administration short refinance and loss-mitigation efforts — is a multipronged attack on the mortgage crisis. Although programs such as HAMP have not met expectations, the president’s overall game plan has fared better.

“The reality is collectively all of them had a very significant impact,” says David Stevens, chief executive of the Mortgage Bankers Association. “I think we have to look at the broad set of solutions that were provided and recognize that many millions of Americans have been helped. The housing market by most experts’ views stabilized, but we still have pockets of significant concern, particularly in those hardest-hit locations.”

The housing affliction is one of President Obama’s most difficult economic obstacles, represented by the $689 billion in second-quarter negative equity that has buried itself into the nation’s economic foundation.

The sickness, however, is contained. In its latest housing scorecard, the Obama administration touted an improving market, citing CoreLogic figures that show the number of underwater borrowers fell 11% from 12.1 million, or 25.2% of all homes with a mortgage, at the beginning of the year to 10.8 million in the second quarter, or 22.3% of homes.

The sideways trajectory of home starts, prices and sales since mid-2009 after free-falling for nearly three years is “attributable to the administration’s aggressive response and also the Federal Reserve’s quantitative easing, which has brought down mortgage rates,” Mark Zandi, Moody’s chief economist, tells HousingWire. “But it’s also fair to say the administration’s policies have fallen short of even their expectations.”

The Obama campaign points out that its push to expand access to refinancing is an idea with aisle-transcending support. In October 2011, shortly before the expansion of HARP, Republican Senators Johnny Isakson, R-Ga., Richard Burr, R-N.C., Scott Brown, R-Mass., and Saxby Chambliss, R-Ga., signed on to a letter in which Sens. Barbara Boxer, D-Calif., and Robert Menendez, D-N.J., urged federal regulators to eliminate loan-to-value limits and loan-level price adjustments. Even top Romney economic adviser Glenn Hubbard put forward a plan in March that is broadly similar to the ones Senate Democrats introduced.

SECOND-TERM PLANS

President Obama’s legislative housing plan heading into a potential second term builds on the HARP expansion, which led to nearly 423,000 Fannie and Freddie mortgages refinanced in the first six months of 2012, more than all of last year, according to the Federal Housing Finance Agency.

The administration was slow to embrace refinancing as a solution to the problem, eventually overcoming its reticence in late 2011. Zandi suspects a concern about mortgage rates rising because of frightened investors suffering from refinancing gave birth to the hesitation. That, he said, would defeat the purpose of a mass refinancing program.

Stevens sees an evolved and learned administration. “HARP 2.0, which has had extraordinary success, is a lesson that I hope the administration takes into the next term if they’re reelected,” he says. “The recognition that programs also need to be made in a participative way, collaboratively with industry. HARP 2.0 clearly reflected that collaboration.”

The president is working to transition foreclosed properties sitting on government books into rental housing, the Obama campaign says, to revitalize communities hit hard by the foreclosure crisis and meet the pressing need for affordable rental housing.

The FHFA launched a pilot program to sell about 2,500 Fannie Mae properties to qualified investors. “This marks the first of a series of steps that the FHFA and the administration will take to develop a smart national program to help manage REO properties,” the White House said in February when the program launched. Real estate investment firm Pacifica Companies is the program’s first winning bidder, purchasing 699 Fannie Mae properties in Florida. The FHFA will announce the winning investors for properties in other areas upon closing of the transactions throughout the rest of the year.

John Taylor, chief executive of the National Community Reinvestment Coalition, says the president needs to focus more on foreclosures going into a second term. “Foreclosures that are waiting in the wing are going to continue to haunt our economy,” Taylor says. About 1.3 million homes, or 3.2% of all homes with a mortgage, were in the national foreclosure inventory in July, down from 1.5 million a year earlier. “It wasn’t his fault, and yes, he made several efforts to address it, but I think he needs to get much more aggressive at keeping people who are still working in their homes.”

For homebuyers, Obama proposes a mortgage lending standard to curtail the likelihood of future foreclosure, transforming into reality his Homeowner Bill of Rights, a set of criteria he says will ensure borrowers and lenders play by the same rules. Topping the list is the Consumer Financial Protection Bureau’s crusade to create clear, straightforward disclosure forms that will be used in all mortgage applications to replace overlapping and confusing forms that contain hidden clauses and opaque terms. The bureau is accepting comments from the public until election day on “easier-to-use” forms scheduled to be released in January.

The bill of rights also requires lenders to disclose mortgage fees and penalties. The CFPB will release final rules in January. The administration, Obama’s campaign says, will “make sure that all those with government-insured loans have these protections and is working with regulators to expand them to all borrowers.

GSE REFORM

President Obama must address a variety of policy issues surrounding the future state of the mortgage finance behemoths Fannie Mae and Freddie Mac, who back 90% of mortgages. The key is ensuring regulations are implemented in such way that allow the expansive inter-related network of domestic and international financial institutions to manage the new rules without impeding the steady flow of mortgage credit and capital to the nation’s housing system.

“The administration is working on the future of the GSEs,” Stevens notes. “Availability of credit for qualified Americans is going to be the greatest challenge on a go-forward basis if we don’t address this layering of risk on the financial intermediaries that we depend on to extend credit.”

The difference between Obama and Romney lies not so much with near-term housing policy, but with how they approach mortgage finance reform, specifically with what portion of the market would receive a government backstop. Under an Obama administration, Zandi says, about two-thirds of a normalized mortgage market would draw government backing, which is the average since the Great Depression.

“In a Romney administration, if you told me it was about one-third, I’d say that’s about right, maybe even lower than that.” And in that case, the mortgage market ultimately looks different as the 30-year fixed-rate mortgage becomes less common in the future.

The Treasury’s February 2011 white paper that describes three scenarios to replace Fannie Mae and Freddie Mac sits in neutral. The first option is a completely privatized system of housing finance, with government insurance limited to the Federal Housing Administration, the U.S. Department of Agriculture and the Department of Veterans’ Affairs. An Obama presidency would likely support the second option, which offers a plan similar to the first. In that plan, a backstop mechanism is in place to give homeowners access to credit during a crisis. In the third scenario, the government continues to leave the mortgage market to private players outside of the FHA and other programs, but offers reinsurance for certain mortgage-backed securities.

“We’ll get some clarity with respect to the future of the mortgage finance system in the next four years,” Zandi says. “That’s a key policy decision for the next president that has a high probability of getting done.”

However, absent a near-term requirement for more Treasury capital contributions to Fannie and Freddie, improved second-quarter financial results at the GSEs could ease pressure on Congress and the next administration to pursue far-reaching GSE reform in 2013.

Julia Gordon, director of housing finance and policy at the Center for American Progress, says continued inaction means decisions could be made by exigencies instead of with a coherent plan on how to deploy the government guarantee — including whether to deploy it.

“How will GSE reform look? Who will be advantaged by it? And how do we ensure access and affordability for a broad spectrum of potential homeowners?” Gordon asks. “To me, either administration needs to grapple with that immediately at the start of the new term.”

PROMISES KEPT AND BROKEN

President Obama followed through on many housing-related promises he made during his campaign.

He expanded the housing vouchers program for homeless veterans, provided homebuyers with clearer standards for understanding mortgages and increased the supply of affordable housing.

And under his presidency, 49 states agreed to a mortgage servicing settlement brokered with Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup that the banks pay $25 billion for allegedly signing foreclosure documents en masse without a proper review of the loan file and evicting homeowners while in the modification process. The Obama administration, specifically Donovan, coaxed California Attorney General Kamala Harris, who was not satisfied with the original dollar amount, back to the negotiations committee. Without her, the total would have been closer to $20 million, says Iowa Attorney General Tom Miller, who led the negotiation talks on behalf of the AGs.

However, other campaign promises remain unfulfilled. Obama never implemented a mortgage interest tax credit for nonitemizers and never repealed provisions of the Chapter 13 bankruptcy code that prohibits bankruptcy judges from modifying the original terms of home mortgages, known as cramdown and something that Zandi said homeowners can forget about at this point.

Fetcher, from the Obama campaign, contends that Romney “has zero proposals to help responsible families refinance or stay in their homes. The president believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference.”

Fetcher is referring to the Republican presidential candidate’s October 2011 statement to the Las Vegas Review-Journal that the national foreclosure process should be allowed to “run its course and hit the bottom.”

Analysts agree that the industry is now a tailwind for a weaker, broader economy. Housing economists from Joseph LaVorgna at Deutsch Bank to Michelle Meyer at Bank of America cite a better alignment of supply and demand. Several years of extraordinarily slow construction, slow processing of foreclosures and reduced housing turnover is significantly reducing the inventory of homes for sale.

“Housing turnover has fallen to a historic low, particularly for voluntary turnover (not due to foreclosure),” Meyer says. “Of course, a reduction in turnover not only translates to less supply, it also curbs demand.”

The MBA’s Stevens says the president, if elected for a second term, will try to make certain that his legacy reflects a recovering national economy, an accomplishment that can’t happen without a thriving housing market.

“That’s fundamental,” Stevens says. “And it’s something everybody recognizes in a greater way today than they may have four years ago.”

Cross River NY Realtor | Home Depot CEO: Housing fix will take some time

Home Depot CEO Frank Blake says a full recovery in the housing segment will take at least two years because of steep losses experienced in the period stretching from 2007 through 2009, according to a Reuters article.

Blake acknowledged that the housing recovery is already underway, but a full recovery is years off.

Home Depot’s success in the marketplace rests squarely on construction activity levels, making the recent thaw in housing good news for the firm.

Still, Blake is cautious about calling it a turnaround when chatting with Reuters.

“The way we look at it is there’s going to be a period of a workout, a fine period of one to two years and then you’re going to get a more robust recovery,” Blake told the paper.

The stalled recovery is the result of lingering issues in the mortgage credit markets and a large inventory of distressed properties, according to Blake.

“The way we look at it is there’s going to be a period of a workout, a fine period of one to two years and then you’re going to get a more robust recovery,” the CEO told the publication.