The Real Estate Bloggers

TARP Inspector Slams Federal Government Housing Programs

Posted: 21 Jul 2010 07:07 AM PDT

Fingerinthedyke The federal government invested 700 billion dollars in the housing industry during it’s past fiscal year. Gulp.

That is 700,000,000,000 dollars folks. Into our industry. By any measure we are not any better than we were last year. Of course, it can and probably should be said without the governments intervention we could be in a much worse place.

But this is the cost of not letting the market fall to it’s natural bottom but instead of trying to manage it down.

700,000,000,000 dollars.

And the irony is the TARP Special Inspector General, Neil Barofsky, is not happy on how the effort is going. In the politically circumspective world of Washington D.C. he has issued a scathing report on the governments handling of the housing market.

The Special Inspector General for the Troubled Asset Relief Program said the increase was due largely to the government’s pledges to supply capital to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) and to guarantee more mortgages to the support the housing market.

Increased guarantees for loans backed by the Federal Housing Administration, the Government National Mortgage Association and the Veterans administration increased the government’s commitments by $512.4 billion alone in the year to June 30, according to the report.

“Indeed, the current outstanding balance of overall Federal support for the nation’s financial system…has actually increased more than 23% over the past year, from approximately $3.0 trillion to $3.7 trillion — the equivalent of a fully deployed TARP program — largely without congressional action, even as the banking crisis has, by most measures, abated from its most acute phases,” the TARP inspector general, Neil Barofsky, wrote in the report. via Reuters

As I have said so many times before, instead of creating a gentle landing for the housing and banking markets, we should have let the carnage happen. Sure there would be pain, but it is the pain of a band-aid being ripped off quickly. It stings like a bastard but it is done.

Right now we are removing the band-aid slowly. Very slowly. And instead of a sharp pain, we have a lingering pain intermixed with moments of respite. But as anyone who knows about removing band-aids, the quick pain is much less painful in the long run than the slow removal.

The problem is that the collusion between the politicians and big business is the driver here. Everyone is so worried about protecting the vested interests instead of doing what is best for the country. Ah, but that is for another post.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

TARP Inspector Slams Federal Government Housing Programs

Federal Government’s Takeover Of The Mortgage Business We often talk about the private sector in real...
Using Government to Stop Real Estate Bubbles Kills Markets How come whenever there is a problem in the...
Federal Tax Credit Expiration Increases Risk of Double Dip Recession in Housing Market If you are paying attention to the experts these...

Toll Brothers: If You Can Not Build Them, Join Them

Posted: 21 Jul 2010 06:35 AM PDT

TollLogo The construction market slowdown to historic lows has the braintrust at Toll Brothers reconsidering their business plan. Since they can not sell new homes right now they have announced a plan to buy distressed properties.

Yep, a top homebuilder is going into the REO game. And it is a brilliant move. One of the biggest fears when buying a foreclosure or short sale is the problems in the property that you can not see. The unexpected surprises you might say.

But Toll Brothers has the contacts for construction professionals in every trade and expertise. They have the resources to buy a home on the cheap at the courthouse, refurbish it quickly and efficiently, and then has the sales tools to drive the consumer to their homes.

This change if picked up by others in the building trade will put pressure on the local guy doing a house or two at a time.

Toll created Gibraltar Capital & Asset Management LLC to “pursue a broad range of real estate acquisition and investment opportunities,” the Horsham, Pennsylvania-based company said in a statement today. Those may include buying loan and property portfolios, developing sites for other builders and assisting in the workout of troubled real estate, the company said.

Toll, led by new Chief Executive Officer Douglas Yearley Jr., joins Lennar Corp. in seeking to make money from distressed real estate and move beyond its traditional homebuilding business. Sales of new U.S. homes slid 33 percent in May to a record low annual rate after the end of a federal tax credit, according to a Commerce Department report last month.via Bloomberg

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Toll Brothers: If You Can Not Build Them, Join Them