Now And Then

NOW

Just when we thought that the housing industry was gaining strength it has taken another gut punch.
February is sizing up to be one of the weakest months ever for housing. First, starts, permits and existing home sales nose-dive. Then, last Wednesday new home sales followed with a staggering 16.9% plunge, to their lowest level since records began in 1963.

Housing has become massive headache for Washington. After months of attempting to micromanaging the industry with subsidies for Fannie, Freddie and buyers' tax credits and tweaking with underwriting, availability of money, the foreclosure process and the property appraisal process, they find the industry in a real quagmire.
The whole mess began with social engineering and messing with free market forces. When that grand experiment turned into an economic disaster of epic proportions, they are further manipulated the free market through central planning.

It's no wonder policymakers are stymied. It's no wonder builders, consumers and housing industry professionals are losing confidence, especially in Washington.

THEN - EARLY WARNINGS

This week's Wall Street Journal brought to light a 2006 internal report by Fannie Mae that warned of abuses in the way lenders and law firms were handling foreclosures. That is many months before regulators showed any concern.
The report cited routine abuses to the foreclosure processes, saying that attorneys in Florida had "routinely made" false statements in court to rush the process.

Fannie Mae's recent response: "Fannie Mae took the necessary steps to address the specific issues identified by the 2006 report and regularly evaluates and enhances oversight of its retained attorney network."

This is just one example of the mismanagement in Fannie and Freddie that led to a full government takeover in 2008, when losses resulted in taxpayers coughing up over $134 billion.

While the report did not address "robo-signing," it did question improper legal filings and the Mortgage Electronic Registration System that was intended to streamline the whole foreclosure process.

One perspective: It seems everyone in Washington is taking turns stirring the pot. It will likely take more than an act of Congress to straighten out the Housing Industry. Perhaps it is best let the market settle to its own levels of supply and demand. It will take time, but it will eventually right its self.

Sent via BlackBerry