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The Telephone Doctor: Essential telephone skills

National Mortgage Professional
Jan 20, 2009

A housing solution no one wants to hearJoe AdamaitisFHA, bailout, massive inventories, foreclosures, Senate Banking Committee, Fannie Mae, Freddie Mac Disclaimer: The views expressed and written in this article are those of the author alone and do not necessarily represent the views of The Mortgage Press, the National Association of Mortgage Brokers and NAMBs state affiliates. Like many, I'm not happy about the current bailout plan in place (or whatever label they put on it), but recognize the gravity of the situation. I'll tell you upfront that I'm not an economist, politician or some rocket scientist simply annoyed and therefore floating new ideas out there. I'm a mortgage banker who has corresponded with everyone from Rep. Barney Frank to Chairman of the Federal Deposit Insurance Corporation Sheila Bair in an attempt to provide an alternative to spending billions of our taxpayer money. I will tell you that except for Sen. John Sununu's office, I received the customary form letter thanking me, with explanations of why we need to spend billions. To keep this simple and leave my opinions at the door, my recommendation is to simply utilize a program that has been around for as long as the Federal Housing Administration (FHA) has been in existence. The plain and simple answer is to provide people access to the "assumable mortgage" program which FHA has offered for years. Many in the business understand that this is nothing more than allowing qualified buyers or borrowers to take over or assume the mortgage of a seller or homeowner who is unable to continue making payments, or who finds a "qualified" buyer/borrower capable of stepping in to take over the mortgage on a home they wish to sell. Plain and simple, it is a way for the seller to save their credit (which is our next big crisis) and for a qualified buyer to obtain a mortgage by paying substantially less in financing costs. The solution may not be the end all cure to our current crisis, but it may stem the tide of massive inventories, foreclosures, spiraling prices and people just walking away, leaving entire neighborhoods destabilized. As many people know, especially those in charge of the Senate Banking Committee, the FHA has long allowed "qualified" buyers to assume a seller's mortgage. My solution is to take this same program and allow it to be used for all mortgages. While I don't pretend to have all the answers, this program could work by quickly changing the Fannie Mae and Freddie Mac guidelines to allow their toxic loans to become assumable. Of course, there will be issues and logistics, and those who oppose the idea, which I would aggressively respond to with: "Wouldn't it be more prudent to fund a program that puts qualified buyers in homes and replenishes cash flows, while simultaneously reducing inventory in large numbers quickly?" Wouldn't it be best to allow American citizens to assume mortgages versus funding the buyout of these loans, which then must be sold off yet by another taxpayer-funded government entity? Has anyone noticed how fast you can put a short sale together? Certainly people in my industry won't like the idea, as we will not be paid for putting people into an assumable mortgage. However, the mortgage and real estate industry will be crucial to helping facilitate the many transactions that may fit into this solution. Their combined knowledge and services will be necessary, and therefore some form of compensation could be made available. Lastly, let's consider the many advantages this program could provide. First and foremost, we begin with billions being saved in taxpayer monies. Next, there would be substantial savings to qualified borrowers, including no downpayments. Lastly, consider the effect the program could have on reviving neighborhoods suffering from vacant homes, which in turn, hopefully provides the stabilization of prices, bringing us to that critical point known as "the bottom." I'm sure I've opened myself up for criticism, but if getting folks to think outside the box can get us back on track quickly without spending $350 to $700 billion, it's worth the effort. I'm just a guy watching from the sidelines like many Americans, and I believe we need to consider the potential of this or any program as an alternative to simply feeding cash to all that ails us. Global demand will remain, and I'm sure billions will go to halt the economic slide we face. But perhaps we can do this a lot cheaper, while at the same time, helping buyers and sellers. It is just an opinion. Joe Adamaitis is a home mortgage consultant for Wells Fargo Home Mortgage. He may be reached at (941) 363-5009 or e-mail joe.adamaitis@wellsfargo.com.
Published
Jan 20, 2009
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