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April 19, 2014

RE/MAX Chairman to Obama, Romney: How About Housing?

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RE/MAX Chairman to Obama, Romney: How About Housing?

Dave Liniger, co-founder and chairman of RE/MAX, issued an open letter to President Obama and Governor Romney expressing disappointment that greater attention has not been devoted to discussing housing issues during the presidential election. 

“As leaders, you ignore housing at our peril,” he writes. 

Liniger says it’s disappointing that solutions to housing issues have not been at the forefront of either candidate’s campaign, particularly given that more than 3.5 million homes have been foreclosed on in the last four years and another 3 million will likely face foreclosure in the next four years. Plus, he notes more than 10.8 million households remain underwater, owing more on their mortgage than their home is currently worth. 

“Housing has always led the country out of dark days of recession, but that has not happened this time,” Liniger writes in the letter. “Still, housing does have the ability to promote a stronger overall recovery if it is allowed to do so. But it will take political leadership in the White House and Congress to acknowledge this fact and take the appropriate steps.” 

While the housing market has shown signs of progress recently with prices and sales, Liniger says challenges persist to the recovery. For example, he points to the “fiscal cliff” and the Dec. 31 expiration of the Mortgage Forgiveness Debt Relief Act of 2007. This act allows home owners who have a loan modification or short sale to not have to later face the mortgage balance as a taxable income on their federal taxes. Without it, he says home sales could likely fall by up to 20 percent as more distressed owners would be reluctant to pursue short sales. 

Liniger also says the high number of sales contracts falling through prior to closing is hampering the housing recovery. He mostly attributes that to the overly stringent underwriting standards in lending. 

“Today’s lending requirements may have prevented the housing crisis five years ago, but the pendulum has swung too far in the opposite direction,” Liniger says. “Otherwise creditworthy individuals are being denied or [are] too intimidated to apply for a home loan.” 

The average FICO score of a rejected mortgage application at Fannie and Freddie was 734, and the average down payment of a rejected applicant was 19 percent, Liniger notes. 

“President Obama and Governor Romney, you still have time to detail your vision,” Liniger writes. “For many Americans, housing is still a crisis, and they are anxiously waiting for solutions.” 

Source: “RE/MAX Co-founder and Chairman Dave Liniger Issues Open Letter to President Obama and Governor Romney,” RISMedia (Oct. 25, 2012)