The Real Estate Bloggers

Federal Government Overhauling Housing Policy? What Does That Mean For You?

Posted: 12 Aug 2010 05:48 AM PDT

Whitehouse_front With the rise of the powerful federal government, policy decisions coming out of Washington DC are having more and more influence over our economic decisions. When it affects the auto industry or the banking industry, these decisions may affect those of us involved in real estate, but it will not change our lives.

However, now the federal government is looking to overhaul it’s regulations on real estate and housing.

Other critics say eliminating or overhauling Fannie and Freddie isn’t enough: The government must reconsider such bedrocks of housing policy as the mortgage interest deduction and the tax exemption of most capital gains from home sales.

They say these misguided or outdated government policies encourage the United States to massively overinvest in housing, shortchanging other parts of the economy. “There’s only so much subsidy to go around at the end of the day,” Katz says.

The administration isn’t tipping its hand in advance of a conference next Tuesday on housing finance reform in Washington. But officials insist that big changes are coming to housing finance. Treasury Secretary Timothy Geithner has said the reforms must: continue to make mortgage credit widely available; promote affordable housing for home buyers and renters alike; protect consumers from predatory lending; and promote financial stability.

“We have committed to having a proposal in place by early next year,” says Federal Housing Administration Commissioner David Stevens. “This is not about delaying. This is about being thoughtful.” via USA Today

Imagine waking up in 2012 that the government eliminates the mortgage interest deduction. How would that affect your business?

Imagine that Freddie Mac and Fannie Mae change their lending criteria? How would that affect your business?

Imagine FHA turns off the lending spigot and those loans go away? How would that affect your business?

These are not just vague questions. These are policies that are under review in Washington DC right now by the Treasury Department. There are people there who do not believe home ownership is a valuable part of the American Dream and are not eager to help families achieve this goal.

In fact, there are many in the present White House who believe that the mortgage interest deduction is an unfair give back to the rich and needs to go away.

Folks, let us be honest. Many of us work in an industry that is subsidized by the Federal Government. The rules have remained the same since 1945 so we have become very complacent. Yet all it takes is an activist White House, and I promise you this is an activist White House, to change the rules of the game.

So you should carefully watch what comes out of Washington regarding real estate and housing policy. There may be huge changes coming that may completely change the dynamics of how you earn your living.

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Federal Government Overhauling Housing Policy? What Does That Mean For You?