Three Ideas that Might Help Resolve the Housing Crisis
March 16, 2012
Dear President Obama (and Governor Romney),
I know that you would like to be re-elected (elected) this year and you’ve probably been thinking about how you might improve the economy over the course of the next 8 months to better your chances (or what you would propose to do to stimulate the economy once in office). One of the biggest problems your administration (the country) has faced is how to resolve the housing crisis. Well, today is your lucky day because I have 3 suggestions that, in my estimation, would improve the housing situation in the US and provide you with talking points that will appeal to fiscally conservative independent voters around the country.
Here are my 3 ideas:
- Require mortgage lenders to publicly disclose all information on properties they own due to foreclosure (I wrote about why this delay is hurting American neighborhoods). Most importantly lenders would need to disclose the outstanding debt on the property. This way the investment community would be able to quantify the likely loss to the lender (and take away the lender’s motivation for keeping foreclosures off the market to avoid recognizing losses on their books).
- Allow individuals to invest in real estate directly from their IRA or 401(k) accounts. Instead of requiring that individuals move their money to a self-directed IRA run by an obscure, possibly fly-by-night, company, allow us to use our own money in our existing accounts to invest in real estate without tax penalties or excessive administrative complexity
- Permit individuals to purchase foreclosures, renovate and flip them to owner occupants with profits treated as long term capital gains for tax purposes. To qualify, the seller must demonstrate property improvements and the buyer must commit to owner occupancy for 1 year or more (similar to current FirstLook program and with Realtors verifying compliance or losing their license if they misrepresent the facts).
That’s it: (1) more transparency from lenders (don’t they owe us something after the way they’ve behaved?), (2) more freedom to use our own money to invest in housing rather than just stocks/bonds, and (3) lower taxes for people willing to invest in America’s neighborhoods.
I’m not a politician or a policy expert so I realize my approach is probably naive in some way but as a home owner, a taxpayer and a small real estate investor I think any one of these changes would have a positive impact on the housing situation and the country’s balance sheet. All 3 just might put the housing market back on solid footing.
I suppose Wall Street types will hate this because it would likely pull some money out of their high-profit casino but isn’t it time they took one for the team?
Thank you for your time and attention.